Proceedings 


OF  THE 


International 

i/ 

Trade  Conference 

Held  under  the  Auspices 

OF  THE 

National  Association  of  Manufacturers 

of  the  United  States  of  America 

In  Co-operation  with 

Banking  and  Transportation  Interests 
of  the  United  States 


At  New  York  City 
December  6,  7,  8,  1915 


Issued  by  the 

NATIONAL  ASSOCIATION  OF  MANUFACTURERS 
30  Church  Street,  New  York  City 


FOREWORD 

On  the  outbreak  of  the  great  war  in  Europe  the  National  Asso- 
ciation of  Manufacturers  issued  a  special  bulletin  in  which  it  was  said 
that  "the  immediate  effects  on  the  commerce  and  industry  of  the  United 
States  are  second  only  to  those  of  the  belligerent  countries.  These 
effects  are  shown  in  the  closing  of  stock  exchanges,  issues  of  emergency 
currency,  fluctuations  in  prices,  shortage  of  raw  material  supplies,  inter- 
ruption of  ocean  transportation,  collapse  of  foreign  exchange,  markets 
for  nearly  half  of  our  exports  wholly  or  partly  closed." 

It  was  fortunate  not  only  for  the  people  of  the  United  States  but  for 
those  of  neutral  countries  that  the  manufacturers  and  financial  insti- 
tutions of  the  United  States  were  in  position  to  withstand  adverse  con- 
ditions, and  in  the  bulletin  referred  to  it  was  further  said  that  "the 
almost  complete  stoppage  of  the  industrial  machinery  of  the  chief 
manufacturing  countries  of  the  world  outside  of  the  United  States  places 
a  great  duty  on  this  country  which  its  humanity  alone  would  compel  it 
to  meet." 

In  issuing  the  call  for  the  International  Trade  Conference,  the  pro- 
ceedings of  which  are  reported  in  full  in  this  volume,  it  was  said  that 
in  the  year  which  had  elapsed  since  the  outbreak  of  the  great  war 
"many  changes  have  taken  place.  Our  stock  exchanges  have  long  been 
open,  the  emergency  currency  has  been  withdrawn  from  circulation,  prices 
of  commodities  have  steadied,  ocean  transportation  to  neutral  countries 
has  been  provided  with  fair  regularity,  and  steps  have  been  taken  to 
substitute  dollar  exchange  for  sterling  exchange  with  the  neutral 
markets  of  the  world." 

Nevertheless,  despite  the  overcoming  of  some  difficulties  and  miti- 
gation of  others,  there  have  continued  sufficient  trouble  and  complications 
arising  out  of  the  great  conflict  to  adversely  affect  business  both 
international  and  domestic  throughout  the  whole  world. 

Therefore,  in  issuing  the  invitations  to  business  men  to  attend  the 
International  Trade  Conference  it  was  emphasized  that  "continuation  of 
the  conflict  means  prolongation  of  many  of  the  troubles  affecting  com- 
merce and  industry,"  and  that  "the  termination  of  hostilities  will  also 
create  problems  in  the  adjustment  of  commercial  and  industrial  relations 
which  again  will  react  on  commerce  and  industry  throughout  the  entire 
world." 

"Because  of  these  facts  and  of  the  intimate  relation  of  American 
business  with  that  of  the  belligerent  as  well  as  neutral  countries,  it  is 
especially  desirable  that  a  clear  understanding  of  all  the  facts  bearing 
on  these  matters  should  be  had  by  the  American  business  man  and  par- 
ticularly the  manufacturer." 

It  was  felt  that  these  were  weighty  and  sufficient  reasons  for 
the  calling  of  an  International  Trade  Conference. 

In  order  that  it  should  be  truly  international  invitations  to  send 
delegates  were  addressed  to  chambers  of  commerce  and  other  commercial 
organizations  and  banks  in  all  countries,  the  letters  of  invitation  ex- 
plaining the  reason  for  the  Conference  in  the  following  words : 

iii 


International  Trade  Conference 


"The  object  of  this  Conference  is  to  consider  ways  and  means  for 
facilitating  international  transactions  so  seriously  interrupted  by  the  great 
war.  To  this  end,  the  principal  problems  to  be  dealt  with  at  the  Con- 
ference will  be  those  relating  to  transportation,  credit  and  exchange. 
These  subjects  are  of  special  interest  to  all  countries,  and  we  rely 
upon  the  cooperation  of  the  business  men  of  all  countries  to  aid  in  solving 
these  problems." 

The  replies  to  these  invitations  showed  a  wide  and  deep  interest 
in  the  objects  of  the  Conference  and  the  attendance  on  account  thereof 
was  much  larger  and  more  representative  than  was  expected  would  be 
the  case  in  view  of  the  difficulties  affecting  communication  and  transporta- 
tion. The  high  and  representative  character  of  the  delegates  to  the  Con- 
ference will  be  seen  from  the  printed  list  of  delegates  and  organizations 
represented  which  will  be  found  in  the  back  of  this  volume. 

The  papers  presented  by  authorities  on  the  subjects  treated  and 
the  discussions  thereof  have  been  materially  helpful  in  at  least  clearly 
explaining  the  troubles  and  difficulties  of  the  present  time  affecting  the 
commerce  of  the  world,  and  to  that  extent  will  aid  in  promoting  the 
solution  of  these  problems.  In  addition  to  this  the  meeting  of  repre- 
sentative business  men  from  so  many  countries  has  necessarily  resulted 
in  a  clearer  mutual  understanding  of  each  other's  requirements  and 
special  difficulties,  and  it  is  trusted  has  laid  the  foundation  for  that  mutual 
sympathy  which  should  lead  to  cooperation  in  the  broader  sense  to 
overcome  the  present  and  prospective  difficulties  affecting  the  exchange 
of  national  products. 

The  great  interest  awakened  in  the  subjects  discussed  by  the  Con- 
ference was  shown  by  the  comprehensive  reports  thereof  and  extracts 
from  addresses  which  were  printed  in  the  daily  and  weekly  press 
throughout  the  United  States. 

And  while  the  great  problems  in  finance,  credit,  transportation  and 
exchange  were  treated  by  authorities  on  those  subjects,  the  needs  of  the 
business  man  inexperienced  in  international  commerce  but  desirous  of 
becoming  acquainted  therewith  were  not  overlooked.  To  that  end  sessions 
of  the  Conference  were  devoted  to  the  discussion  of  sources  of  credit 
information,  salesmanship  and  advertising,  and  groups  of  exhibits  showing 
the  facilities  of  ports  of  the  world  for  handling  shipments,  model 
documents  for  use  in  facilitating  the  filling  of  orders  from  overseas 
and  also  examples  of  approved  methods  of  packing  goods  so  that  they 
may  be  safely  carried  were  arranged  and  proved  of  special  interest  to 
the  delegates  both  from  home  and  abroad. 

w.  M.  B. 


IV 


INDEX 

PAGE 

Advertising  in  Foreign  Trade,  paper,  Hugh  M.  Kahler 415-424 

Ambassador  of  Brazil,  speech  at  banquet 334 

American  Salesman  Abroad,  The,  paper,  Louis  C.  M.  Reed 441-452 

Arnold,  John  J.,  paper,  "An  American  Bank  for  Foreign  Trade" 270-273 

Arrangements,  General  Committee  on xi 

Aspegren,  John,  address  on  Sweden 257-259 

Australia,  Trade  Relations  Between  the  United  States  and,  paper,  Hon. 

P.  E.  Quinn 27-34 

,  address,  Percy  Roderick  McLean 371-373 

,  address,  Lieut.  J.  J.  Simons 374-379 

Baker,  Bernard  N.,  address  and  paper,   "Legislation  Necessary  for  a 

Merchant  Marine" 71-78 

— ,  remarks  on  merchant  marine 89,  105-107,  115,  117,  118 

Bank  for  Foreign  Trade,  An  American,  paper,  John  J.  Arnold 270-273 

Bank  for  Foreign  Trade,  An  Independent,  address,  V.  Gonzales 274-279 

Bank  for  Foreign  Trade,  An  Independent,  paper,  Committee  on  Bank- 
ing and  Currency  of  the  National  Association  of  Manufacturers.  .279-292 

Banking,  discussion  of  papers  on 292-294 

Banking  Relations,  the  Extension  of  Our  Foreign,  paper,  Benjamin 

Joy 385-393 

Banks,   Foreign   Branches   of  American   National,   paper,   Ernest  E. 

Ling 263-270 

Banquet,  The 329-364 

Barrett,  John,  telegram  from 329 

Bartlett,  Dudley,  remarks  on  credit  information 136 

Behr,  Alexander  Wladimiro witch,  address 19-25 

Benney,  William  M.,  remarks  on  credit  reports 120-122,  141 

,  introduces  Mr.  Search  as  chairman  fourth  session 160 

,  response  to  vote  of  thanks 433-434 

,  remarks  on  fourth  recommendation 456 

Bergman,  L.  John,  remarks  on  credit  information 143-144 

Brazil,  address  of  Antonio  Carlos  de  Several 34-38 

Brazil,  Ambassador  of,  speech  at  banquet 334 

Brill,  S.  S.,  remarks  on  credit  information 137-141,  145 

Brooks,  John  W.,  remarks  on  securing  credit  information 156-157 

Brown.  J.  Wylie,  address,  "American  Relations  with  the  Near  East" .  .253-257 

,  remarks  on  credit  information 131-135,  142 

Chandler,  C.  L.,  address 108-109 

Clausen,  John,  paper,   "International  Trade  as  a  Sign  of  National 

Prosperity" 162-170 

Colombia,  address  and  paper,  Francisco  Escobar 38-40 

Commercial  Conditions,  General  Review  of,  Dr.  Albert  A.  Snowden 7-17 

Committee  on  Arrangements,  General xi 

Committee  on  Exhibits xvi 

Committee  on  Recommendations 161-162 

Committee  on  Recommendations,  members  who  signed  report  of 458,  459 

Committee  on  Recommendations,  report  of 453-459 

Competition  and  the  Necessity  for  Organization,  International,  speech, 

Wm.  S.  Kies 347-358 

Cooperation  in  Foreign  Trade  Development,  paper,  Harrison  C.  Lewis.435-440 
Cowles,  James  L.,  action  on  report  of  Committee  on  Recommendations . .     455 

,  offers  resolution 459 

,  remarks 116,  117,  118,  205-206,  207,  433,  452 

Credit  and  the  Future  of  American  Foreign  Trade,  paper,  V.  Gonzales .  214-238 

Credit  granters,  cooperation  between 158-160 

Credit  information,  means  for  securing 145-158 

Credit  reports,  information  needed  in 124-144 

V 


International  Trade  Conference 


Credit  situation,  comments  on  the,  Win.  E.  Peck 238-240 

Credits  Against  Imports  and  Exports,  paper,  Georg  von  Seebeck. . .  .170-176 

Delegates,  list  of 474-486 

Department  of  State  and  Foreign  Trade,  address,  Hon.  Wm.  B. 

Fleming 425-432 

Discount  Market  and  Its  Relation  to  Foreign  Trade,  the  Development 

of  the  American,  paper,  John  E.  Rovensky 401-408 

Dixon,  George  Dallas,  paper,  "Preparedness  and  our  Railroads 62-71 

Douglas,  Hon.  Wm.  H.,  paper,  "The  Present  Status  of  the  American 

Merchant  Marine  and  Pending  Legislation" 90-105 

Emery,  James  A.,  address  as  Toastmaster 330-334 

,  remarks  as  Toastmaster 334,  346,  347,  359,  364 

Escobar,  Francisco,  address  and  paper 38-43 

Ewell,  James  L.,  remarks  on  merchant  marine 118,  119 

Exchange  Conditions,  Present  Foreign,  paper,  David  H.  G.  Penny..  .394-400 
Export  Policy,  the  Making  of  an,  paper,  Dr.  Edward  Ewing  Pratt . . .  181-202 
Farquhar,  A.  B.,  action  on  report  of  Committee  on  Recommendations 

454,  455,  456,  457,  458 

,  remarks  on  the  tariff 206-207 

Flagg,  Stanley  G.,  Jr.,  question 203 

Fleming,  Hon.  Wm.  B.,  address 425-432 

,  questions 326,  327,  328 

,  remarks  on  foreign  and  domestic  credits 176-177,  292-293 

,  remarks  on  the  tariff  and  commercial  agreements 299-301 

Gama,  His  Excellency  Domicio  da,  Brazilian  Ambassador,  speech  at 

banquet 334 

Gonzales,  V.,  address,  "An  Independent  Bank  for  Foreign  Trade". .  .274-279 
,  address  and  paper,  "Credit  and  the  Future  of  American 

Foreign  Trade 208-238 

,  remarks  on  credit  reports 123,  124 

,  remarks  on  foreign  and  domestic  credits 292,  293,  294 

,  remarks  on  securing  credit  information 155-156,  157 

Goodhue,  F.  Abbot,  remarks 327 

Green,  C.  A.,  remarks  on  securing  credit  information 149-151,  162 

,  seconds  motion  for  vote  of  thanks  to  Secretary  of  Conference. .     433 

Hauss,  C.  F.,  remarks  on  securing  credit  information 157-158 

India,  address,  Nusserwanjee  Maneckshaw  Marshall 408-415 

International  Competition  and  the  Necessity  for  Organization,  speech, 

Wm.  S.  Kies 347-358 

International  Situation  and  Future  Trade  Relations,  The,  paper, 

Hon.  John  Bassett  Moore 241-252 

Investments,  Foreign  Securities  and  their  Influence  on  American 

Foreign  Trade,  paper,  J.  Santilhano 314-324 

Investments,  Foreign,  discussion  on 324-328 

Investor,  Foreign  Securities  and  the  American,  paper,  Mortimer  L. 

Schiff 302-313 

Italy,  address  on,  Guido  Rossati 365-371 

Iverson,  George  D.,  Jr.,  action  on  report  of  Committee  on  Recommen- 
dations  453,  454,  455,  457 

,  address 294r-299 

,  remarks 328 

Jenks,  Professor  Jeremiah  W.,  speech  at  banquet 359-364 

Johnson,  Professor  Emory  R.,  address  and  paper,  "Transportation  and 

Foreign  Trade" 47-62 

Johnston,  Percy  H.,  remarks 177,  178 

Joy,   Benjamin,  paper,   "The  Extension  of  Our  Foreign  Banking 

Relations" 385-393 

Kahler,  Hugh  M.,  paper,  "Advertising  in  Foreign  Trade" 415-424 

Keith,  Edward  A.,  remarks  on  cooperation  between  credit  granters.  .158-159 

Kies,  William  S.,  speech  at  banquet 347-358 

Kiretchjian,  Herant  M.,  address 382-385 

Krusen,  George  C.,  remarks  on  credit  information 146-149 

vi 


Index 

Kryshtofovich,  Dr.  Theodor,  action  on  report  of  Committee  on  Recom- 
mendations       453 

,  address 25-27 

,  remarks 202-203 

Lang,  A.  J.,  announcement 313-314 

Legislation  Necessary  for  a  Merchant  Marine,  paper,  Bernard  N.  Baker. 73-78 
Lewis,  Harrison  C.,  paper,  "Cooperation  in  Foreign  Trade  Develop- 
ment"  435-440 

Liggett,  Miss,  remarks  on  credit  information 142 

Ling,  Ernest  E.,  address  and  paper,  "Foreign  Branches  of  American 

National  Banks" , 260-270 

List  of  delegates 474-486 

McAneny,  Hon.  George,  address  of  welcome 1-4 

McCarroll,  William,  address  as  chairman  Sixth  Session 365 

McLean,  Percy  Roderick,  address 371-373 

Marshall,  Nusserwanjee  Maneckshaw,  paper,  "India". 408-415 

Matthews,  James,  remarks  on  securing  credit  information 152-155,  156 

Merchant  Marine,  Legislation  Necessary  for  a,  paper,  Bernard  N.  Baker. 73-78 
Merchant  Marine,  a  Government  Controlled,  paper,  Robert  W.  Woolley  .79-89 
Merchant  Marine  and  Pending  Legislation,  the  Present  Status  of  the 

American,  paper,  Hon.  Wm.  H.  Douglas 90-105 

Merchant  Marine,  address,  P.  H.  W.  Ross 109-112 

Merchant  Marine,  address,  Captain  Wm.  P.  White 112-114 

Merchant  Marine,  general  discussion 105-119 

Minister  of  Peru,  speech  at  banquet 335-346 

Montt,  D.  G.,  action  on  report  of  Committee  on  Recommendations 456 

— ,  remarks 126-128,  203-204 

Moore,  Hon.  John  Bassett,  paper,  "The  International  Situation  and 

Future  Trade  Relations" 241-252 

Morrell,  John  W.,  remarks  on  securing  credit  information 157 

National  Association  of  Manufacturers,  description  of  its  work ix 

National  Association  of  Manufacturers,  Committee  on  Banking  and 
Currency,  paper,  "American  Banking  Abroad,  an  Independent 

Bank" 279-292 

Neuflize,  Baron  Jacques  de,  address 17-18 

,  remarks  on  credit  information 128-130,  145,  146 

Nissen,  Ludwig,  letter  from • 273 

Noel,  J.  V.,  remarks 393-394 

Norway,  address,  Trygve  Wettre 44-47 

Parmelee,  Charles  L.,  remarks  on  credit  information 135 

Peck,  Wm.  E.,  address  on  the  credit  situation 238-240 

Penny,  David  H.  G.,  paper,  "Present  Foreign  Exchange  Conditions' '.394-400 

Pepper,  S.,  remarks 178-180,  324-325 

Persia,  address,  Herant  M.  Kiretchjian 382-385 

Persia  To-day  and  To-morrow,  address  by  the  Imperial  Persian  Consul- 
General 379-381 

Peru,  Minister  of,  speech  at  banquet 335-346 

Pezet,  His  Excellency  Federico  Alfonso,  speech  at  banquet 335-346 

Phillips,  F.  S.,  action  on  report  of  Committee  on  Recommendations. . . .     458 

,  remarks  on  cooperation  between  credit  granters '. .  159-160 

,  remarks  on  credit  information 125,  126,  139 

Pope,  Colonel  George,  President  of  the  National  Association  of  Manu- 
facturers, calls  Conference  to  order 1 

address  as  chairman 4-7 

remarks  at  third  session 122 

address  at  banquet 329-330 

introduces  Mr.  Wm.  McCarroll  as  chairman  for  Wednesday 364 

remarks  on  closing  of  Conference 460-461 

Power  Company,  The  Nicholas,  announcement 313-314 

Pratt,  Dr.  Edward  Ewing,  paper,  "The  Making  of  an  Export  Policy" .  181-202 

,  remarks 203,  204 

Preface * iii 

Preparedness  and  Our  Railroads,  George  Dallas  Dixon 63-71 

vii 


International  Trade  Conference 


Program xii-xvi 

Quinn,  Hon.  P.  E.,  paper,  "The  Trade  Relations  Between  the  United 

States  and  Australia" 27-34 

,  remarks  on  merchant  marine 115,  116 

Recommendations,  Committee  on 161-162 

,  members  of  Committee  on  who  signed  report 458,  459 

,  Report  of  Committee  on 453-459 

Reed,  Louis  C.  M.,  paper,  "The  American  Salesman  Abroad" 441-452 

Report  of  Committee  on  Recommendations 453-459 

Ross,  P.  H.  W.,  address  on  merchant  marine 109-112 

Rossati,  Guido,  address 366-371 

Rovensky,  John  E.f  paper,  "The  Development  of  the  American  Dis- 
count Market  and  Its  Relation  to  Foreign  Trade" 401-408 

Russia,  address,  Alexander  Wladimirowitch  Behr 19-25 

,  address,  Dr.  Theodor  Kryshtofovich 25-27 

Salesman  Abroad,  The  American,  paper,  Louis  C.  M.  Reed 441-452 

Santilhano,  J.,  paper,  "Foreign  Securities  and  Their  Influence  on 

American  Foreign  Trade" 314-324 

SchifF,  Mortimer  L.t  paper,  "Foreign  Securities  and  the  American 

Investor" 302-313 

,  remarks  on  foreign  investments 325,  327,  328 

Search,  Theodore  C.,  remarks  as  chairman  fourth  session 160-161 

,  proposes  vote  of  thanks  to  secretary  of  Conference 432-433 

Securities  and  the  American  Investor,  Foreign,  paper,  Mortimer  L. 

Schiff 302-313 

Securities  and  Their  Influence  on  American  Foreign  Trade,  Foreign, 

paper,  J.  Santilhano 314-324 

Seebeck,  Georg  von,  paper,  "Credits  Against  Imports  and  Exports" . .  170-176 

,  remarks  on  credits 177-180 

Sessions:    First,  Monday  morning,  December  6 1-43 

Second  Monday  afternoon,  December  6 44-119 

Third,  Monday  evening,  December  6 119-160 

Fourth,  Tuesday  morning,  December  7 160-252 

Fifth,  Tuesday  afternoon,  December  7 252-328 

Sixth,  Wednesday  morning,  December  8 364-408 

Seventh,  Wednesday  afternoon,  December  8 408-461 

Simons,  Lieut.  J.  J.,  address 374-379 

Smith,  Alexander  R.,  remarks  on  merchant  marine 114,  115,  117 

Snowden,  Dr.  Albert  A.,  paper,  "General  Review  of  Commercial 

Conditions" 7-17 

,  remarks  on  merchant  marine 116 

Sosnawski,  George  J.,  remarks  on  credit  information 130-131 

Several,  Antonio  Carlos  de,  address 34-38 

Sweden,  address,  John  Aspegren 257-259 

Topakyan,  H.  H.,  Imperial  Persian  Consul-General,  address,  "Persia 

To-day  and  To-morrow" 379-381 

Trade  as  a  Sign  of  National  Prosperity,  International,  paper,  John 

Clausen 162-170 

Transportation  and  Foreign  Trade,  paper,  Professor  Emory  R.  Johnson .  48-62 
Tregoe,  J.  H.,  address  and  remarks  as  Chairman  Third  Session.  .119,  120, 

122,  123,  124,  125,  126,  128,  130,  131,  133,  134,  135,  136,  139,  141,  142 

143,  144, 145,  148,  149,  151,  152,  154,  155,  156,  157,  158,  169,  160 

Wettre,  Trygye,  address  on  Norway ; 44-47 

White,  Captain  Wm.  P.,  address  on  merchant  marine 112-114 

,  remarks 118,  119,  203,  207,  294,  40O-401 

,  report  as  Chairman  of  Committee  on  Recommendations.  .453-459 

,  remarks  on  parcel  post 459,  460 

Woolley,  Robert  W.,  paper,   "A  Government  Controlled  Merchant 

Marine" 79-89 

,  remarks  on  merchant  marine 116 

Wyman,  Walter  F.,  remarks  on  credit  information 144,  162 

,  remarks  on  cooperation  between  credit  granters 169 

viii 


NATIONAL  ASSOCIATION  OF  MANUFACTURERS 
of  the  United  States  of  America 

As  this  volume  will  be  sent  not  only  to  all  delegates  to  the  Inter- 
national Trade  Conference  but  to  commercial  organizations,  government 
officials,  bankers  and  prominent  business  men  in  all  countries,  a  few 
words  describing  the  National  Association  of  Manufacturers  and  the 
scope  of  its  activities  appear  to  be  in  order. 

The  National  Association  of  Manufacturers  is  an  organization  whose 
active  membership  is  confined  to  individuals,  firms  and  companies  en- 
gaged in  manufacturing  operations  in  the  United  States.  It  was  or- 
ganized at  the  city  of  Cincinnati  in  1895  by  manufacturers  for  the 
declared  purposes  of  conserving  the  interests  of  manufacturers  of  all 
classes  in  their  activities  as  manufacturers  and  employers  and  also  for 
aiding  and  expanding  the  commerce  of  the  United  States  with  all  lands. 
It  started  with  a  membership  of  several  hundred  manufacturers  and  has 
grown  to  be  the  largest  national  organization  in  the  United  States  whose 
active  membership  is  wholly  made  up  of  manufacturing  establishments. 

All  manufacturing  industries  are  represented  in  this  membership, 
and  as  a  rule  by  the  larger  proportion  of  the  energetic  and  progressive 
manufacturers  in  each  industry. 

From  its  beginning  the  Association  has  taken  an  active  part  in  the 
promotion  of  legislation  believed  to  be  in  the  interests  of  commerce  and 
the  country  as  a  whole  and  through  its  annual  conventions  held  in  the  lead- 
ing cities  of  the  country  the  attention  of  business  men  has  been  focused  on 
the  questions  of  the  day  affecting  the  business  interests  of  the  nation. 

Largely  through  its  instrumentality  the  Department  of  Commerce 
was  established  as  a  branch  of  the  United  States  Government. 

In  1901  it  organized  a  great  reciprocity  convention  at  Washington 
which  served  to  further  impress  on  the  business  interests  of  the  country 
and  on  its  legislators  the  necessity  for  treating  the  customs  tariff  from  a 
purely  business  point  of  view. 

It  has  for  many  years  been  a  leader  in  the  movement  for  establishing 
a  tariff  commission  which  would  afford  the  Congress  of  the  nation  that 
reliable  and  unbiased  information  concerning  the  effect  of  the  tariff  on 
the  various  industries  of  the  country  which  is  so  necessary  for  the  con- 
struction of  a  customs  law  that  will  best  meet  the  requirements  of  the 
whole  people  and  permit  of  the  negotiation  of  commercial  treaties  with 
other  lands  in  a  business-like  manner. 

It  has  given  especial  attention  to  the  labor  problems  of  the  country 
and  while  opposing  the  assumption  of  arbitrary  power  which  has  been  at- 
tempted by  some  of  the  labor  organizations  and  the  efforts  to  place  class 
legislation  on  national  and  state  statute  books,  has  on  its  part  endeavored 
to  promote  legislation  and  measures  which  would  tend  to  harmonize  rela- 
tions between  employer  and  employed. 

It  has  taken  the  lead  as  an  organization  in  the  advocacy  of  legisla- 
tion for  insuring  workmen  against  accidents,  to  that  end  sending  a 
special  commission  to  Europe  in  1910  to  make  a  study  of  European 

ix 


International  Trade  Conference 


legislation  of  this  character  and  the  results  thereof,  and  the  printed 
report  of  this  commission  is  a  standard  work  of  reference  for  students 
of  this  important  subject.  In  these  lines  of  activity  the  Association 
maintains  committees  devoted  to  industrial  betterment,  welfare  work  and 
industrial  education. 

In  the  field  of  international  commerce  the  Association  has  also  been 
active  from  the  beginning.  Twenty  years  ago  the  manufacturers  of 
the  United  States  as  a  class  knew  very  little  about  other  countries 
as  possible  markets  for  American  manufactured  goods.  The  Association, 
therefore,  organized  commissions  of  its  own  members  and  sent  these 
commissions  to  various  countries  for  the  purpose  of  studying  the  markets 
of  those  countries  and  becoming  acquainted  with  their  business  people. 
Such  commissions  visited  several  Latin-American  countries  and  com- 
missioners were  sent  to  other  lands,  reports  of  these  commissions  and 
commissioners  being  issued  in  printed  form  and  widely  distributed. 

The  Association  also  established  in  the  last  century  experimental 
sample  warehouses  on  a  large  scale  in  South  America  (at  Caracas  in  1898) 
and  the  Far  East  (at  Shanghai  in  1900). 

Still  broadening  this  line  of  work  the  Association  in  1914  sent 
a  commission  to  Australasia  and  the  Far  East  not  only  for  the  purpose 
of  looking  into  the  commercial  conditions  but  also  for  studying  the 
effects  on  Australia  and  New  Zealand  of  their  legislation  on  industrial  and 
social  matters. 

In  order  to  be  of  practical  service  to  its  members  in  the  international 
field  the  Association  has  gradually  built  up  and  now  maintains  a 
corps  of  some  1,800  correspondents  located  in  every  country  and  nearly 
every  city  of  commercial  importance  throughout  the  world. 

Fully  realizing  that  commerce  between  countries  to  be  mutually 
satisfactory  cannot  be  one-sided  but  must  be  based  on  the  exchange  of 
products,  the  Association  has  always  offered  its  services  free  of  charge 
to  the  business  men  of  all  countries  desirous  of  securing  reliable  in- 
formation concerning  the  United  States  and  its  industries  and  its  services 
in  this  respect  have  frequently  been  utilized  by  the  representatives  of 
governments,  by  special  commissions  from  other  countries  as  well  as 
by  individuals  from  abroad  who  visited  the  United  States  for  the  pur- 
pose of  making  a  study  of  its  institutions,  products,  industrial  estab- 
lishments or  people. 

The  general  offices  of  the  Association  are  conveniently  located  in 
the  City  of  New  York  and  its  Foreign  Trade  Department  maintains 
a  large  staff  of  linguists  so  that  no  matter  whether  or  not  a  visitor 
understands  English  he  may  feel  assured  of  finding  at  this  office 
someone  familiar  with  his  own  language  and  able  to  afford  him  all 
the  information  he  may  need  for  accomplishing  the  purpose  of  his 
mission  with  least  loss  of  time. 

Finally  it  is  desirable  to  bear  in  mind  that  the  Association  does 
no  buying  or  selling  and  engages  in  no  activities  for  private  pecuniary 
gain.  It  is  supported  solely  by  annual  fees  from  its  members  and  all  its 
revenues  are  devoted  to  the  welfare  of  its  members  either  directly  in 
personal  service  or  indirectly  through  courtesies  to  their  actual  or 
prospective  connections  in  other  countries.  w.  M.  B. 

x 


GENERAL  COMMITTEE  ON  ARRANGEMENTS 


Representing  the  National  Association  of  Manufacturers 


GEORGE  POPE  (Chairman),  Hartford,  Conn. 
President,  National  Association  of 
Manufacturers  of  the  United  States 

W.  C.  ALLEN,  New  York 

President,  Yale  &  Towne  Mfg.  Co. 

GEORGE  H.  BARBOUR,  Detroit,  Mich. 

Vice-President,  Michigan  Stove  Co. 

P.  R.  BRIGGS,  Boston,  Mass. 

Treasurer,  Thomas  G.  Plant  Company 

JOHN  A.  CAMPBELL,  Trenton,  N.  J. 

President,  The  Trenton  Potteries  Co. 

L.  A.  CARTON,  Chicago,  111. 

Treasurer,  Swift  &  Co.,  Union  Stock- 
Yards 

W.  H.  COTTINGHAM,  Cleveland,  Ohio 

President,  Sherwin-Williams  Company 

RICHARD  H.  EDMONDS,  Baltimore,  Md. 
Editor,  Manufacturers  Record 

C.  C.  HANCH,  South  Bend,  Ind. 

Treasurer,  Studebaker  Corporation 

ALVIN  HUNSICKER,  New  York 

Secretary,  Standard  Oil  Cloth  Co. 


C.  R.  JOHNSON,  San  Francisco,  Cal. 
President,  Union  Lumber  Co. 

FREDERICK  J.  KOSTER,  San  Francisco,  Cal. 
President,  California  Barrel  Co. 

GEORGE  E.  LONG,  Jersey  City,  N.  J. 

Vice-President,  Joseph  Dizon  Crucible 
Company 

M.  A.  OUDIN,  Schenectady,  N.  Y. 

Manager,  Foreign  Department,  General 
Electric  Company 

J.  SCOTT  PARRISH,  Richmond.  Va. 

Treasurer,  Richmond  Cedar  Works 

H.  K.  PORTER,  Pittsburgh,  Pa. 

President,  H.  K.  Porter  Company 

J.  W.  RAWLE,  Philadelphia,  Pa. 

Vice-President,  J.  G.  Brill  Company 

EDWIN  C.  SHAW,  Akron,  Ohio 

Vice-President,  B.  F.  Goodrich  Co. 

ERNEST  G.  SWIFT,  Detroit,  Mich. 

Gen'l  Manager,  Parke,  Davis  &  Co. 


Representing  Banking  Interests 


JOHN  CLAUSEN,  San  Francisco,  Cal. 
Manager,  Foreign  Department, 
Crocker  National  Bank 

F.  ABBOT  GOODHUE,  Boston,  Mass. 

Vice-President,  First  National  Bank 

W.  S.  KIES,  New  York 

Vice-President,  National  City  Bank 


DAVID  H.  G.  PENNY,  New  York 

Vice-President,  Irving  National  Bank 

CHARLES  H.  SABIN,  New  York 

President,  Guaranty  Trust  Company  of 
New  York 


Representing  Transportation  Interests 


GEO.  D.  DIXON.  Philadelphia.  Pa. 

Vice-President,  Pennsylvania  Railroad 
Company 

P.  J.  PLYNN,  New  York 

Vice-President,  Delaware,  Lackawanna 
&  Western  Railroad  Company 

FAIRFAX  HARRISON.  Washington,  D.  C. 

President,  Southern  Railway  CoompanY 


JULIUS  KRUTTSCHNITT,  New  York 

Chairman,  Executive  Committee 
Southern  Pacific  Company 

W.  E.  MULLINS,  New  York 

General  Manager,  Freight  Dept., 
United  Fruit  Company 

A.  H.  SMITH,  New  York 

President,  New  York  Central  Lines 


Secretary 

WILLIAM  M.  BENNEY,  30  Church  St.,  N.  Y. 
Manager,  Foreign  Trade  Department, 
National  Association  of  Manufacturers 


PROGRAM  OF  THE  CONFERENCE 

The  Conference.  The  International  Trade  Conference  has  been  called 
in  order  to  bring  together  men  from  all  countries  interested  in  the  development 
of  the  commerce  of  their  respective  lands  in  order  to  ascertain  as  far  as  prac- 
ticable through  the  exchange  of  views  and  opinions  in  what  way  or  manner 
international  commerce  may  be  promoted  and  facilitated  under  the  present 
exceptional  conditions  and  thus  pave  the  way  for  rehabilitation  and  extension 
of  commercial  transactions. 

Responsibility.  Neither  the  National  Association  of  Manufacturers  nor 
the  banking  and  transportation  interests  cooperating  with  the  Association  is 
responsible  for  opinions,  statements,  or  criticisms  that  appear  in  the  papers 
or  may  be  made  by  the  speakers. 

The  War.  It  will  not  be  permitted  to  introduce  or  discuss  matters 
affecting  the  attitude  or  policies  of  governments  in  connection  with  the  great 
conflict  now  waging  in  Europe. 

Recommendations.  No  resolutions  will  be  accepted,  but  recommenda- 
tions may  be  handed  to  the  Secretary  for  submission,  without  reading,  to  a 
Committee  on  Recommendations. 

Any  delegate  desiring  to  submit  remarks  or  opinions  to  be  read  to  the 
Conference  by  the  Secretary  is  requested  to  submit  them  in  typewritten  form, 
in  duplicate,  with  the  understanding  that  they  can  only  be  read  if  the  time 
allotted  to  those  who  are  to  deliver  their  remarks  orally  is  not  exhausted. 


First   Session,    Monday,    December    6,    beginning  9:45   a.m. 
9:45  A.M.     Conference  called  to  order  by  Colonel  GEORGE  POPE,  President  of 

the  National  Association  of  Manufacturers. 
10:00  A.M.     Address  of  Welcome  by  His  Honor,  the  ACTING  MAYOR  OF  NEW 

YORK. 
10:15  A.M.     Response  and  address  by  Colonel  GEORGE  POPE,  as  Chairman  of 

the  Session. 
10:30  A.M.     "General  Review  of  Commercial  Conditions.1'    Dr.  ALBERT  A. 

SNOWDEN,  of  the  National  Association  of  Manufacturers. 
10:50  A.M.     "France."    Baron  JACQUES  DE  NEUFLIZE  (of  the  banking  house 

of  De  Neuflize  &  Cie.,  of  Paris),  as  delegate  of  the  Paris 

Chamber  of  Commerce. 
11:00  A.M.     "Russia."    Mr.   ALEXANDER   WLADIMIROWITSCH   BEHR,   Vice- 

President  and  Delegate  of  the  Russian  American  Chamber  of 

Commerce,  of  Moscow. 
11:15  A.M.     "Australia."    Hon.  P.  E.  QUINN,  Deputy  Trade  Commissioner 

of  New  South  Wales. 
11:35  A.M.     "Brazil."    Mr.  ANTONIO  CARLOS  DE  SOVERAL,  Delegate  of  the 

Chamber  of  Commerce  of  Bahia. 
1 1 :50  A.M.     "  Colombia."    Mr.  FRANCISCO  ESCOBAR,  Delegate  of  the  Chamber 

of  Commerce  of  Bogota. 


XII 


Program  of  the  Conference 


Second  Session,  Monday,  December  6,  beginning  2  p.m. 
2:00  P.M.     "  Norway."    Mr.  TRYGVE  WETTRE,  Delegate  of  the  Chamber  of 

Commerce  of  Christiania. 
2:15  P.M.     "Transportation    and    Foreign    Trade"    Professor   EMORY    R. 

JOHNSON,   Wharton   School   of   Finance   and   Commerce, 

University  of  Pennsylvania. 

(Discussion  under  5  minute  rule) 

3:00  P.M.  "Preparedness"  Mr.  GEORGE  D.  DIXON,  Vice-President  of  the 
Pennsylvania  Railroad  Company,  Philadelphia. 

(Discussion  under  5  minute  rule) 

3:45  P.M.  "Legislation  Necessary  for  a  Merchant  Marine."  Mr.  BERNARD 
N.  BAKER,  Baltimore,  Md. 

"A  Naval  Auxiliary  Merchant  Marine"  Mr.  ROBERT  W. 
WOOLLEY,  Director  of  the  Mint,  representing  the  Ad- 
ministration's viewpoint. 

"An  American  Merchant  Marine:  What  the  Business  Men  De- 
sire and  What  the  Country  Needs."  Hon.  WM.  H.  DOUGLAS, 
New  York  City. 

(Discussion  of  above  subjects  by  Mr.  P.  H.  W.  Ross,  President  National  Marine 
League  of  the  United  States;  Capt.  WM.  P.  WHITE,  Treasurer  Lowell  Paper 
Corporation,  Lowell,  Mass.;  W.  I.  YOUNG,  Vice-President  Internationa 
Traders,  Ltd.,  New  York,  and  others) 


Third  Session,  Monday,  December  6,  beginning  8:15  p.m. 

Chairman:  Mr.  J.  H.  TREGOE,  Secretary  of  the  National  Associa- 
tion of  Credit  Men,  New  York. 

8:15  P.M.     FOREIGN  CREDIT  REPORTS  AND  HOW  OBTAINED.     (An 
Informal  "Round-table"  Discussion). 

a.  Character  of  Information  Needed  in  Credit  Reports. 

b.  Sources  for  Securing  Foreign  Credit  Reports. 

c.  The  Desirability  of  Exchange  of  Experience  with  Foreign 

A  ccounts. 

After  the  opening  remarks  discussion  of  these  subjects  will  be  limited  to 
the  five-minute  rule  unless  the  audience  authorizes  an  extension  of  the  speaker's 
time. 

There  will  be  in  attendance,  prepared  to  offer  information  and  make 
suggestions,  the  staff  of  the  Credit  Reports  Bureau  of  the  National  Association 
of  Manufacturers,  representatives  of  the  leading  commercial  agencies,  repre- 
sentatives of  banks  doing  a  foreign  business,  as  well  as  export  managers  and 
credit  men  who  have  given  this  subject  careful  study. 


Xlll 


International  Trade  Conference 


Fourth  Session,  Tuesday,  December  7,  beginning  10  a.m. 

Chairman  for  Tuesday:  Mr.  THEODORE  C.  SEARCH,  of  Philadel- 
phia, President  National  Association  of  Manufacturers  from 
1896  to  1902. 

10:00  A.M.  "International  Trade  and  Finance  as  a  Sign  of  National  Pros- 
perity." Mr.  JOHN  CLAUSEN,  Manager  Foreign  Department, 
Crocker  National  Bank,  San  Francisco,  Cal. 

10:20  A.M.  "  Credits  Against  Imports  and  Exports."  Mr.  GEORG  VON  SEE- 
BECK,  of  the  Guaranty  Trust  Company,  New  York. 

(Discussion  under  5  minute  rule) 

10:45  A.M.  "The  Making  of  an  Export  Policy."  Dr.  E.  E.  PRATT,  Chief, 
Bureau  of  Foreign  and  Domestic  Commerce,  Washington, 

D.  C. 

(Discussion  by  Mr.  CHARLES  DENBY,  Vice-President,  Hupp  Motor  Car  Co. 
Detroit,  and  others) 

11:15_A.M.  "Credit  and  the  Future  of  American  Foreign  Trade."  Mr.  V. 
GONZALES,  Banking  Adviser  of  the  National  Association  of 
Manufacturers. 

(Discussion  by  Mr.  WM.  E.  PECK,  President,  Wm.  E.  Peck  &  Co.,  New  York, 
Mr.  O.  P.  STEHN.  General  Sales  Manager  Hydraulic  Pressed  Steel  Co. 
Cleveland,  and  others) 

12:OONOON.  "The  International  Situation  and  Future  Trade  Relations."  Hon. 
JOHN  BASSETT  MOORE. 

(Discussion  by  Mr.  F.  B.  WHITNEY,  General  Counsel,  Lake  Torpedo  Boat  Co., 
Bridgeport,  Conn.,  and  others) 

Fifth  Session,  Tuesday,  December  7,  beginning  2  p.m. 

2:00  P.M.     "The  Levant."     Mr.  J.  WYLIE  BROWN,  Executive  Secretary, 

American  Chamber  of  Commerce  for  the  Levant,  and  Mr. 

ROBERT  C.  RINDELAUB,  of  Constantinople  and  New  York. 

"Sweden."    Mr.  JOHN  ASPEGREN,  of  New  York,  representing  the 

General  Export  Association  of  Sweden. 

2:30  P.M.     "Foreign  Branches  of  American  National  Banks."    Mr.  ERNEST 

E.  LING,  Manager  Foreign  Trade  Department,  National 
City  Bank,  New  York. 

"An  American  Bank  for  Foreign  Trade."  Mr.  JOHN  J.  ARNOLD, 
Vice-President,  First  National  Bank,  Chicago,  111. 

"An  Independent  Bank  for  Foreign  Trade."  By  the  Committee 
on  Banking  and  Currency  of  the  National  Association  of 
Manufacturers  (Mr.  LUDWIG  NISSEN,  Chairman,  Mr. 
JAMES  MAYNARD  and  Mr.  V.  GONZALES). 

(Discussion  of  the  above  three  papers  under  the  5  minute  rule) 
4:00  P.M.      "Foreign  Securities  and  the  American  Investor."    Mr.  MORTIMER 

L.  SCHIFF,  of  Kuhn,  Loeb  &  Co.,  New  York. 
"Foreign  Securities  and   Their  Influence  on  American   Foreign 
Trade."    Mr.  J.  SANTILHANO,  of  the  Guaranty  Trust  Co., 
New  York. 

(Discussion  of  above  two  papers  under  5  minute  rule) 


XIV 


Program  of  the  Conference 


Tuesday  Evening,  December  7 

BANQUET 
Hotel  Astor,  at  7  p.m. 

Speakers:  His  Excellency  DOMICIO  DA  GAM  A,  Ambassador  from  Brazil. 

His  Excellency  FEDERICO  ALFONSO  PEZET,  Minister  from  Peru. 

Mr.  W.  S.  KIES,  Vice-President/^National  City  Bank,  New  York . 

Professor  JEREMIAH  W.  JENKS,  of  New  York  University. 
Toastmaster:     Mr.  JAMES  A.  EMERY,  Washington,  D.  C. 

Sixth  Session,  Wednesday,  December  8,  beginning  9:45  a.m. 

Chairman  for  Wednesday:     Mr.  WILLIAM  MCCARROLL,  of  New 

York. 
9:45  A.M.     "Italy."     Mr.   GUIDO   ROSSATI,   Commercial  Attache",   Italian 

Consulate,  New  York. 

10:00  A.M.  "A ustralia."  Mr.  PERCY  RODERICK  McLEAN,  Director  of  Frazer 
&  Best,  Ltd.,  Sydney. 

Lieut.  J.  J.  SIMONS,  of  Perth,  Australia. 

10:15  A.M.     "Persia."     Mr.  H.  H.  TOPAKYAN,  Imperial  Persian  Consul  Gen'l. 
Mr.  HERANT  M.  KIRETCHJIAN,  First  Secretary  Im- 
perial Persian  Consulate  General. 

10:30  A.M.      "The  Extension  of  Foreign  Banking  Relations."    Mr.  BENJAMIN 
JOY,  Vice-President,  National  Shawmut  Bank,  Boston,  Mass. 
(Discussion  under  5  minute  rule) 

11:00  A.M.  "Present  Foreign  Exchange  Conditions."  Mr.  DAVID  H.  G. 
PENNY,  Vice-President,  Irving  National  Bank,  New  York. 

(Discussion  under  5  minute  rule) 

11:30  A.M.  "The  Development  of  the  American  Discount  Market  and  Its 
Relation  to  Foreign  Trade."  Mr.  JOHN  E.  ROVENSKY, 
Manager  Foreign  Exchange  Department,  National  Bank  of 
Commerce,  New  York. 

(Discussion  under  5  minute  rule) 

Seventh  Session,  Wednesday,  December  8,  beginning  2  p.m. 

2:00  P.M.     "India."    Mr.  NUSSERWANJEE  MANECKSHAW  MARSHALL,  Mer- 
chant of  Bombay,  London  and  New  York. 
2:15  P.M.     "Advertising  in  Foreign  Trade."    Mr.  HUGH  M.  KAHLER,  New 

York  City,  Editor  "How  to  Export." 

(Discussion  by  Mr.  F.  S.  PHILLIPS,  Export  Manager,  American  Ever  Ready 
Works,  Long  Island  City,  N.  Y.,  and  others) 

"  What  the  Department  of  State  Should  Do  for  our  Foreign  Trade." 
Hon.  WILLIAM  B.  FLEMING,  Foreign  Trade  Adviser,  Depart- 
ment of  State. 

2:46  P.M.  "Cooperation  in  Foreign  Trade  Development."  Mr.  H.  C.  LEWIS, 
General  Manager,  National  Paper  &  Type  Company,  New 
York  City. 

(Discussion  by  Mr.  F.  V.  N.  PAINTER,  President,  Comas  Cigarette  Machine 
Co.,  Salem,  Va.,  and  others) 

3:30  P.M.  "  The  American  Salesman  Abroad."  Mr.  Louis  C.  M.  REED,  of 
the  Chamber  of  Commerce  of  the  United  States. 

xv 


International  Trade  Conference 


INFORMATION  BUREAU:  A  desk  will  be  found  in  the  annex  at 
which  all  may  apply  for  information  regarding  the  Conference,  or  delegates 
thereto,  or  for  any  information  desired. 

Interpreters:  Members  of  the  staff  of  the  Foreign  Trade  Department 
of  the  NATIONAL  ASSOCIATION  OF  MANUFACTURERS  will  be  in  attendance  to 
aid  delegates  from  abroad  who  may  not  be  f amilair  with  the  English  language. 
They  will  be  there  to  interpret  into  and  from  French,  Spanish,  German, 
Portuguese,  Italian,  Scandinavian,  Russian  and  Japanese*  (Apply  at  Informa- 
tion Desk). 

Foreign  Trade  Information:  Members  of  the  Foreign  Trade  Depart- 
ment staff  of  the  NATIONAL  ASSOCIATION  OF  MANUFACTURERS  and  of  New 
York  banks  will  be  in  attendance  to  give  general  information  to  those  specially 
interested  in  such  subjects  as  Foreign  Credit  Reports,  Foreign  Exchange, 
registering  of  Trade-marks,  Customs  Tariff's,  Forwarding  and  Insurance.  (Apply 
at  Information  Desk.) 

Geographical  Divisions :  A  number  of  tables  will  be  found  in  the  annex 
rooms  with  the  names  of  foreign  countries  thereon.  This  means  that  any 
delegate  or  group  of  delegates  desiring  to  obtain  special  information  regarding 
those  countries,  or  to  meet  delegates  therefrom,  may  have  the  opportunity  of 
doing  so  by  applying  at  the  table  or  at  the  Information  Desk. 


EXHIBITS 

Committee  on  Exhibits:  WALTER  P.  WYMAN,  Export  Manager,  Carter's  Ink  Co., 
Boston,  Mass.;  HAROLD  B.  GREGORY,  Export  Manager,  Patton  Paint  Co.,  New  York;  F. 
W.  KEOUGH,  Editor,  "American  Industries,"  New  York. 

Examples  of  Approved  Methods  of  Packing  Goods  for  Foreign 
Shipment.  The  packages  themselves  will  be  shown  as  put  up  by  firms  of 
long  experience  in  export  trade.  The  exhibits  will  include  a  wide  variety  of 
goods  packed  with  various  objects  in  view,  such  as  strength,  lightness,  pre- 
vention of  pilferage,  attacks  of  water,  vermin,  climate,  etc. 

History  of  an  Export  Order.  In  this  exhibit  will  be  shown  the  model 
forms  and  documents  used  in  executing,  shipping  and  financing  foreign  orders. 
A  booklet  elucidating  the  chief  points  of  this  exhibit  will  be  distributed. 

Bureau  of  Foreign  and  Domestic  Commerce.  Publications,  etc.,  on 
foreign  trade  and  illustrations  or  explanations  of  ways  and  means  adopted  by 
the  Government  Bureau  for  promoting  the  export  trade  of  the  United  States. 

Pan  American  Union.  Publications,  etc.,  showing  the  work  which  this 
institution,  supported  by  all  the  republics  of  North  and  South  America,  is 
doing  in  promoting  their  social,  industrial  and  commercial  welfare. 

Ports.  Photographic  and  diagrammatic  illustrations  of  the  facilities 
and  advantages  of  the  principal  American  ports  for  handling  foreign  trade 
will  be  shown  together  with  pictorial  views  of  leading  foreign  ports. 

[NOTE. — In  this  exhibition  a  remarkable  series  of  COPYRIGHTED  panoramic  views  of 
South  American  cities  has  been  kindly  loaned  to  the  Conference  by  Mr.  I.  F.  SCHEELER,  of 
Philadelphia.! 

xvi 


International  Trade  Conference 

Hotel  Astor,  New  York  City 
FIRST  SESSION 

Monday   Morning,  December    6,  1915 

THE  Conference  was  called  to  order  at  10:15  A.M.,  by  the 
Chairman,  Col.  George  Pope,  President  of  the  National  Associa- 
tion of  Manufacturers  of  the  United  States  of  America. 

THE  CHAIRMAN  :  The  Conference  will  please  come  to  order. 

I  have  the  pleasure  of  introducing  to  you  first  His  Honor, 
the  Acting  Mayor  of  the  City  of  New  York,  Mr.  George 
McAneny,  who  will  welcome  you  to  this  city.  (Applause.) 

Address  of  Welcome  by  the  Acting  Mayor 

MR.  MCANENY:  Mr.  Chairman,  ladies  and  gentlemen:  I  am 
very  sorry  that  Mayor  Mitchel,  because  of  his  illness,  is  unable  to 
be  here.  I  know  that  he  is.  But  his  misfortune  sometimes  is  my 
better  fortune,  and  I  am  glad  that  I,  at  least,  have  the  chance,  as 
Acting  Mayor,  to  welcome  you,  and  to  give  you  some  idea,  pos- 
sibly, of  the  gratification  that  we  feel  in  New  York  City  that  you 
have  come  here  for  this  most  important  purpose,  and  that  you 
chose  our  town  as  your  place  of  gathering. 

The  growth  of  your  Association  itself  has  been  phenomenal. 
That  I  have  readily  discovered  by  a  mere  glance  at  your  liter- 
ature. 

You  are  devoting  yourselves  not  merely  to  the  advancement 
and  better  development  of  the  great  manufacturing  interests  that 
are  represented  in  your  membership,  but  you  are  doing  a  splen- 
did public  and  social  work  in  the  development  of  a  better  under- 
standing of  those  measures  that  are  intended  for  the  relief  and 
improvement  of, the  working  conditions  of  those  who  serve  you. 
In  that  respect  there  is  a  natural  partnership  between  you  and 
those  who  are  at  work  along  governmental  lines  to  accomplish 
the  same  purposes.  It  sounds  rather  familiar,  for  instance,  to  a 
member  of  the  city  government  of  New  York,  to  hear  of  what  you 
are  doing  to  advance  the  cause  of  a  proper  workmen's  compen- 

1 


First  Session — Monday  Morning 


sation  scheme,  and  of  what  you  are  doing  for  better  fire  prevention 
and  for  the  adoption  generally  of  up-to-date  safety  devices.  These 
are  all  things  that  are  in  our  own  program.  We  are  at  work 
on  them,  too,  from  day  to  day;  and  I  have  long  since  come  to 
the  conclusion  that  the  best  results  are  those  that  we  are  going 
to  secure  through  a  union  of  just  such  bodies  as  yours  and  the 
forces  of  government  itself ;  because  these  things  make  not  merely 
for  economy  in  themselves,  not  merely  for  better  results  gene- 
rally, but  they  make  very  largely  for  the  improvement  of  the  con- 
ditions under  which  American  men  work  and  make  their  living; 
and  that,  of  course,  is  the  thing  that  ought  to  be  nearest  our  hearts 
all  the  time. 

In  your  more  direct  work,  however,  in  the  development  of 
your  own  interests,  you  have  managed  to  gather  together  in  one 
Association  those  who  represent  more  than  one-half  the  manu- 
facturing output  of  the  United  States.  That,  in  itself,  as  a 
triumph  of  organization,  is  something  at  which  we  must  stop  and 
wonder.  The  improvement  of  the  individual  condition  of  each 
of  your  members  cannot  but  be  aided  when  you  represent  a 
force  such  as  that;  when  you  are  able  to  compare  notes  upon  a 
scale  such  as  that,  and  to  agree  upon  those  measures  that  are  of 
common  interest  and  common  importance. 

As  to  your  plan  for  this  week,  the  bringing  together  of  this 
International  Trade  Conference  at  a  time  when  it  is  in  the  mind 
of  every  thinking  man  to  consider  questions  that  have  to  do  with 
our  international  trade,  questions  that  are  looming  so  large,  and 
where  so  much  will  depend  upon  their  proper  solution — I  regard 
that  as  an  incident  of  national  importance. 

My  satisfaction  in  seeing  you  here  upon  such  a  mission  is 
two-fold.  It  is  selfish  largely,  because  whatever  you  may  do  to  im- 
prove the  conditions  of  international  trade  is  bound  to  reflect  itself 
largely  in  the  increased  prosperity  of  our  own  great  port ;  but  my 
satisfaction  from  the  patriotic  point  of  view  is  even  greater. 

I  am  sure  you  are  convinced  that  the  unusual  affairs  which 
are  now  passing,  creating  unusual  conditions  in  manufactur- 
ing and  trade,  shall  not  be  permitted  to  pass  without  some  careful 
regard  for  the  future  that  is  to  follow,  without  some  plan  for  the 
better  adjustment  of  things  when  the  war  has  ended,  and  pre- 
paredness for  peace  has  settled  down  as  our  immediate  object. 

I  am  sure  that  you  will  permit  no  losses  to  come  because  there 
has  not  been  preparation  for  that  readjusted  basis  of  trade  and 
manufacturing  that  must  follow,  and  which,  if  properly  adjusted, 

2 


Address  of  Welcome  by  the  Acting  Mayor 

is  bound  to  redound  greatly  to  the  profit  and  the  improvement 
of  the  United  States. 

Your  bringing  together  distinguished  representatives  of  these 
interests  in  other  countries  is  a  signal  accomplishment;  repre- 
sentatives not  merely  of  our  trade  with  the  countries  that  so  soon, 
let  us  hope,  shall  be  at  peace  on  the  other  side  of  the  water,  but 
of  the  great  nations  to  the  south  of  us,  where  I  have  always 
believed  the  largest  opportunity  of  all  awaits  us. 

These  things  you  are  going  to  do  more  intelligently  in  the 
future  because  of  the  addresses  and  the  papers  you  will  hear 
from  these  gentlemen  during  the  week  and  the  discussions  that 
are  bound  to  follow. 

I  think,  too,  that  you  must  have  in  your  plan  a  closer  rela- 
tionship with  our  own  government  and  what  it  is  doing  in  these 
matters. 

I  recall  that  fifteen  or  more  years  ago  I  served  as  chairman  of 
a  national  committee  of  civil  service  organizations,  the  object  of 
the  committee  being  to  secure  a  better  consular  service,  a  better 
way  of  doing  things  through  our  consular  representation.  Mr. 
Harry  Garfield,  who  is  now  president  of  Williams  College,  served 
as  chairman  of  a  corresponding  committee  representing  the 
chambers  of  commerce  and  boards  of  trade  of  the  country,  and  we 
worked  together  in  getting  into  Congress  the  so-called  Lodge  bills, 
in  getting  executive  orders  that  ran  ahead  of  acts  of  Congress, 
and  in  doing  whatever  it  was  possible  to  do  to  put  our  consular 
service  upon  a  business  basis,  rather  than  upon  a  basis  of 
transient  politics.  You  know  that  a  great  deal  has  been  done  since 
that  time;  that  some  things  that  occurred  in  the  old  days  are  no 
longer  possible,  and  that  actually  our  consular  service,  through 
splendid  organization  in  the  Department  of  State,  and  through  the 
proper  arrangement  of  every  branch  of  its  great  system  through- 
out the  world,  is  beginning  to  serve  trade  in  an  immeasurably 
better  way. 

I  was  interested  the  other  night,  in  sitting  next  to  Secretary 
Redfield,  at  a  dinner  here  in  town,  in  some  notes  that  he  showed 
me  indicating  what  the  daily  service  of  the  consular  news  is 
now  doing,  and  the  orders  that  had  been  placed  with  American 
firms  through  the  use  of  the  service  that  the  Department  of  State 
offers  and  the  Department  of  Commerce  offers  without  charge 
to  anyone  whomsoever.  I  understand  that  the  system  there  is 
merely  for  any  firm  to  file  its  application  with  the  departments 
at  Washington  to  have  copies  of  these  trade  dispatches,  these  in- 

3 


First  Session — Monday  Morning 


dications  of  where  great  orders  may  be  placed,  and  that  an  im- 
mense amount  of  business  has  been  placed  in  that  way. 

That  relationship  of  which  I  spoke  a  moment  ago  in  the  cities, 
where  all  your  great  plants  are,  that  relationship  between  the 
manufacturer  at  home  and  his  own  city  government  in  bringing 
about  better  local  conditions  affecting  his  business,  is  reflected,  in 
turn,  on  this  vastly  greater  scale,  in  your  relationship  as  a  whole 
to  the  government  of  the  United  States. 

I  have  been  satisfied  that  at  least  much  greater  attention  has 
been  given  by  our  government  to  these  matters  of  the  great  peace 
of  the  future  and  the  improvement  of  our  industrial  and  trade  re- 
lations than  to  the  possibility  or  the  hope,  in  some  quarters,  of 
war.  I  am  glad  that  there  is  a  program  of  that  kind  shaping  out 
so  well.  Its  expression  is  found  in  what  the  State  Department 
and  the  Department  of  Commerce  are  doing. 

Now,  gentlemen,  there  is  every  reason  for  great  hope  for 
your  own  future.  There  is  every  reason  to  believe  that  great 
prosperity  must  come — perhaps  it  is  a  hit  sad  to  think  of  it,  that 
we  are  to  have  so  great  a  share  in  it  while  the  cruel  and  gradual 
readjustment  goes  on  abroad;  but  at  least  it  is  our  duty  to  make 
the  most  of  it,  not  only  for  our  own  benefit,  but  in  order  that 
America  may  better  serve  those  on  the  other  side  of  the  sea 
who  will  be  left  so  largely  dependent  upon  us  when  the  trouble 
is  over. 

I  congratulate  you  upon  what  you  are  doing,  and  I  again  ex- 
press my  gratification  that  you  are  here  in  New  York.  I  hope  that 
you  will  have  an  eminently  successful  week  of  reporting  and  of 
discussion,  and  I  know  that  out  of  it  will  come  a  program  that 
will  inure  greatly  to  our  common  benefit.  (Great  applause.) 


THE  CHAIRMAN:  I  am  sure,  gentlemen,  that  we  all  appre- 
ciate the  very  kind  words  that  have  been  spoken  to  us  by  His 
Honor,  the  Acting  Mayor,  and  you  may  be  sure,  delegates  from 
home  and  abroad,  that  New  York  has  given  you  a  hearty  welcome. 

Address  of  Col.  George  Pope  as  Chairman 

Ladies  and  gentlemen,  members  of  the  Conference:  In  wel- 
coming to  this  Conference  on  behalf  of  the  manufacturing,  bank- 
ing and  transportation  interests  of  the  United  States  the  delegates 
from  home  and  abroad  with  whose  presence  we  are  honored,  I 
express  for  the  organization  the  leadership  of  which  has  been 

4 


Address  of  Col.   George  Pope 


entrusted  to  me  the  gratification  afforded  by  this  impressive  gath- 
ering of  men  great  in  affairs. 

On  another  occasion  I  interpreted  the  spirit  of  the  chartered 
purposes  of  the  National  Association  of  Manufacturers  in  the 
one  word  "service";  service  first  to  our  country,  second,  service 
to  our  fellow  men,  both  the  toilers  in  the  humblest  trades  and  the 
men  of  genius  charged  with  vast  industrial  responsibilities,  and, 
lastly,  service  to  the  perpetuation  of  our  magnificent  manufactur- 
ing industry. 

In  the  twenty-one  years  of  our  history  as  an  organization  a 
great  measure  of  our  service  has  been  the  promotion  of  knowl- 
edge and  influence  of  the  United  States  in  lands  beyond  our 
borders.  We  have  cultivated  in  an  intimate  way  the  acquaintance 
of  other  nations ;  we  have  sought  their  cooperation  and  their  good 
will ;  we  have  lent  our  aid  to  closer  bonds  of  official  connections. 

Gentlemen,  this  International  Trade  Conference  has  been 
called  by  the  National  Association  of  Manufacturers  for  the  pur- 
pose of  bringing  together  representatives  of  the  business  interests 
of  all  countries  who  have  at  heart  the  development  of  the  com- 
merce of  their  respective  lands  in  order,  by  the  interchange  of 
views  and  opinions,  to  ascertain  as  far  as  may  be  practicable  in 
what  way  or  manner  international  commerce  may  be  promoted 
and  facilitated  under  the  exceptional  conditions  now  prevail- 
ing, and  thus  aid  in  paving  the  way  for  the  resumption  of  trade 
relations  along  normal  lines  and  the  further  extension  of  com- 
mercial transactions  with  one  another. 

In  this  work  the  Association  has  had  the  cordial  cooperation 
of  leading  representatives  of  banking  and  transportation  interests 
of  the  United  States. 

It  has  been  the  aim  of  the  General  Committee  of  Arrange- 
ments for  this  Conference  to  make  it  truly  international  in  its 
scope,  and  to  that  end  invitations  were  sent  out  several  months 
ago  to  commercial  bodies  and  banks  in  all  countries. 

To  these  invitations  we  have  most  cordial  responses,  and  in 
view  of  the  difficulties  of  travel  under  present  conditions  the 
attendance  of  representatives  directly  from  foreign  lands  is  most 
gratifying. 

Many  trade  bodies  in  acknowledging  the  invitation  have 
stated  that,  while  not  able  to  send  delegates,  they  would  be  much 
interested  in  having  a  report  of  the  proceedings  sent  to  them,  and 
it  is  our  intention  to  have  the  papers  and  proceedings  printed  in 
book  form,  so  that  all  delegates  interested  may  secure  copies. 

5 


First  Session — Monday  Morning 


In  all,  delegates  to  this  Conference  have  been  appointed  by 
trade  bodies  and  banks  in  twenty-five  countries. 

We  wish  to  make  the  procedure  of  this  Conference  as  simple 
as  possible,  so  that  no  unnecessary  time  may  be  taken  up  in  the 
discussions.  Therefore,  the  Committee  of  Arrangements  decided 
that  no  resolutions  should  be  passed.  This  we  think  is  only  fair 
to  the  various  trade  bodies  represented,  as  the  prime  object  of 
the  Conference  is  an  educational  one,  and  intelligent  decisions  on 
all  controversial  matters  which  may  be  brought  up  could  not  be 
made  without  further  debate  and  study. 

Therefore,  instead  of  a  Committee  on  Resolutions,  it  is  the 
intention  to  appoint  a  Committee  on  Recommendations. 

Those  desiring  to  make  recommendations  will  please  hand 
them  typewritten,  in  duplicate,  to  the  Secretary  of  the  Conference, 
who  without  reading  will  hand  them  to  the  Committee  on  Recom- 
mendations. 

In  voting  on  recommendations  which  this  Committee  may 
present,  seeing  that  the  delegates  present  would  not  be  in  a 
position  to  commit  their  various  bodies  to  any  one  line  of  action, 
it  has  been  decided  that  the  voting  shall  be  by  individuals  instead 
of  by  delegations.  Therefore,  each  delegate  present  will  be  entitled 
to  a  vote  on  such  recommendations  as  may  be  presented. 

The  recommendations  which  may  be  approved  can  then  be 
taken  up  by  each  delegation  with  its  respective  body  for  further 
action. 

Now,  I  wish  to  emphasize  what  has  been  placed  on  the  pro- 
gram with  respect  to  responsibility.  Neither  the  National  As- 
sociation of  Manufacturers  nor  the  banking  and  transportation 
interests  cooperating  with  the  Association  is  responsible  for  opin- 
ions, statements  or  criticisms  that  appear  in  the  papers,  or  which 
may  be  made  by  the  speakers  in  their  addresses.  On  the  other 
hand,  all  persons  may  feel  themselves  at  liberty  to  speak  freely 
their  opinions  on  any  of  the  subjects  before  the  Conference,  within 
the  time  limits  set  for  the  addresses  and  discussion. 

One  other  matter  I  perhaps  scarcely  need  to  refer  to,  and 
that  is  that  the  Committee  has  instructed  the  Chair  not  to  permit 
the  introduction  or  discussion  of  matters  affecting  the  attitude 
or  policies  of  governments  in  connection  with  the  great  conflict 
now  waging  in  Europe. 

As  many  of  the  papers  have  been  printed  and  distributed  they 
will  not  all  be  read  in  full,  but  their  authors  will  summarize  them, 

6 


General  Review  of  Commercial  Conditions 


bringing  out  their  chief  points,  thus  allowing  more  time  for  open 
discussion. 

From  this  Conference  which  we  are  beginning  we  shall  learn 
many  delightful,  fruitful  lessons.  From  it  will  come  to  all  of 
us,  in  face  to  face  meetings  with  men  from  all  parts  of  the  world 
gathered  for  frank  expressions  of  their  views  and  for  the  en- 
lightened study  of  problems  and  perplexities,  a  greater  enthusiasm 
for  the  success  of  our  commercial  relations,  an  increase  of  pros- 
perity through  foreign  trade.  May  this  great  gathering,  by  rea- 
son of  the  increased  knowledge  which  it  will  impart  of  conditions 
and  needs  in  foreign  trade,  be  the  harbinger  of  a  greater  in- 
terest and  activity  in  the  pursuit  of  commerce  when  amity  shall 
prevail  among  all  nations  and  they  lay  aside  the  weapons  of  war 
to  travel  again  the  pleasant  paths  of  peace. 


Dr.  Albert  A.  Snowden  will  now  address  the  Conference,  giv- 
ing a  "General  Review  of  Commercial  Conditions."  Dr.  Snow- 
den  is  a  member  of  the  staff  of  the  National  Association  of  Man- 
ufacturers and  for  many  years  has  made  a  special  study  of  trade 
and  industrial  conditions  in  the  United  States  and  European 
countries.  In  1914  Dr.  Snowden  was  a  member  of  the  Foreign 
Trade  Commission  of  the  National  Association  of  Manufacturers 
which  visited  Australia  and  the  Orient.  This  Commission  would 
have  continued  its  investigation  by  a  tour  through  Siberia  and 
Europe,  but  the  outbreak  of  the  war  necessitated  its  return  to 
the  United  States  by  way  of  the  Pacific.  Dr.  Snowden. 

General  Review  of  Commercial  Conditions 

By  DR.  ALBERT  A.  SNOWDEN, 

Of  the  National  Association  of  Manufacturers 

A  brief  review  of  commercial  conditions  must  be  restricted  to 
a  very  few  general  remarks.  Such  observations  have  no  par- 
ticular value,  but  may  serve  to  bring  some  phases  of  the  situation 
before  the  Conference  as  preliminary  to  the  more  expert  and 
detailed  treatment  of  them  by  the  learned  and  skilled  authorities 
here  present. 

The  War  an  Economic  Earthquake 

The  war  has  been  a  titanic  earthquake  in  the  economic 
world,  upheaving  the  structure  of  industry,  estopping  the  rivers  of 
commerce  and  finance  or  diverting  them  into  new  and  unexpected 

7 


First  Session — Monday  Morning 


channels.  Of  the  physical  world  you  will  recall  that  "the  de- 
structive vibration  accompanying  an  earthquake  advances  in  a 
series  of  waves  from  one  or  more  deeply  situated  central  points 
called  foci";  and,  further,  that  "the  destructive  effects  vary  with 
the  nature  of  the  ground  through  which  the  vibration  passes  and 
with  the  distance  of  the  place  in  question  from  the  focus/'  Local 
conditions,  an  underlying  sand-bed,  for  instance,  may  check  the 
effects  of  the  shock. 

And  so  it  is  with  the  war.  The  foci  of  this  economic  upheaval 
are  in  Europe,  of  course.  The  "earthquake  weather"  preceding 
the  shock  was  too  brief  for  warning.  The  prophets  were  cata- 
pulted into  bankruptcy.  Chasms  and  fissures  have  riven  the 
earth;  as  a  volcanic  island  is  wont  to  rise  and  disappear,  a  whole 
nation  sinks  from  view  in  a  night;  mountains  of  wealth  are 
crumbling,  and  the  jagged  peaks  of  stupendous  national  debt  loom 
ominously  in  the  darkening  tempest.  To  the  uttermost  parts  of 
the  earth  are  felt  the  rumbling  and  crashing,  the  destructive  vibra- 
tions, of  this  economic  earthquake. 

Relations  with  Zone  of  Upheaval 

Distance,  in  economics,  depends  more  upon  relations  than  upon 
mere  latitude  and  longitude.  South  Africa  and  the  Australasian 
antipodes,  bound  up  not  only  politically  but  financially  and  com- 
mercially with  a  section  of  the  War  Zone,  shouldered  a  heavy 
burden.  Chile,  which  runs  its  government  and  supports  a  large 
part  of  its  population  by  the  production  of  nitrate,  was  well-nigh 
ruined  until  its  commerce  began  to  find  a  new  outlet.  The  coffee- 
producing  countries  of  Central  and  South  America  were  hard 
hit.  Cuba  had  in  its  valuable  sugar  crop,  and  in  its  predominating 
trade  with  neutrals,  an  "underlying  sand-bed"  that  checked  the 
economic  shock.  Scandinavia  and  Holland  found  one  current  of 
trade  impeded,  but  gained  another.  The  situation  in  the  United 
States  may  be  called  mixed,  with  the  present  advantage  in  favor 
of  the  sand-bed  and  the  cyclone-cellar. 

Commerce,  Exchange,  Credit,  Upset  by  War 

The  initial  upset  cut  off  our  exports ;  gave  King  Cotton  such 
a  shock  as  he  has  not  had  since  the  Civil  War;  and  spilled 
a  tidal  wave  of  American  gold  in  the  direction  of  Europe.  Ship- 
ping was  demoralized.  The  moratoria  upset  credit  arrangements. 
Exchange  rates  soared  into  rare  atmosphere.  Then  came  a  re- 
verse flood  of  orders  from  Europe  for  goods — provisions  and 
equipment.  This  outcome  has  kept  a  large  portion  of  our  popu- 

8 


General  Review  of  Commercial  Conditions 


lation  feverishly  busy,  and  has  given  the  exchange  experts  another 
set  of  problems.  The  war  has  not  only  familiarized  us  with 
bank  acceptances,  it  has  sent  the  whole  world  to  school  to  study 
exchange,  and  it  has  stimulated  our  financial  wizards  to  invent 
some  new  device,  some  sort  of  economic  gyroscope,  to  stabilize 
exchange.  For  on  the  stability  of  exchange  our  trade  depends. 

Readjustments  Necessary 

We  have  become  accustomed  to  the  continual  readjustments 
demanded  by  the  situation  of  the  past  sixteen  months,  not  only 
in  the  financial  world,  but  in  manufacturing,  exporting  and  im- 
porting— in  production  and  trade  of  all  kinds.  Least  harmed, 
on  the  whole,  are  the  producers  of  food-stuffs  in  neutral  coun- 
tries, for  while  the  granaries  of  Russia  are  filled  to  bursting  with 
cereals  that  have  no  market  outlet,  the  fields  of  Western  Europe 
are  ravaged  by  invaders  and  defenders  alike.  The  shortage  of 
male  workers  and  of  draught  animals,  makes  Europe  turn  to 
American  methods  of  farming  by  motor-driven  machinery,  even 
in  the  case  of  small  plots  which  will  be  machine-farmed  through 
cooperation. 

Other  readjustments  are  many  and  important.  The  popularity 
of  the  wooden  sabot,  in  one  section  of  the  world,  and  of  the 
cloth-topped  shoe,  in  another,  was  a  result  of  the  sudden  shortage 
of  leather.  The  enormous  demand  for  woolens  for  the  out-of- 
doors  life  of  gigantic  armies  has  put  a  strain  upon  this  industry. 
The  exceeding  prosperity  of  our  steel  trade  is  the  result  of  a 
demand  that  became  acute  when  the  principal  coal  and  iron  re- 
gions of  Continental  Europe  were  enclaved  behind  a  wall  of 
bayonets.  The  cutting  off  of  our  supply  of  mineral  dyestuffs 
stimulated  science  and  capital  to  new  achievements ;  meanwhile, 
the  vegetable  dyestuffs  regained  prominence.  We  are  import- 
ing antimony  from  China;  spelter  from  Australia;  nitrate  and 
iron  ores  from  Chile;  copper  from  Peru,  and  tin  from  Bolivia, 
in  new  and  unheard  of  quantities.  Our  entire  producing,  man- 
facturing,  commercial  and  financial  methods  are  being  modified 
and  revised  because  of  the  great  World  War. 

The  so-called  "war  business,"  or  the  provisioning  of  the  bellig- 
erent nations,  has  been  the  most  important  factor  in  the  broad- 
ening of  business  improvement  in  the  United  States.  The  gratify- 
ing increase  in  railroad  earnings;  a  large  proportion  of  the  five- 
billion-dollar  external  trade,  and  the  entire  two-billion-dollar  ex- 
port trade  balance  of  the  twelve  months,  are  the  result  of  the  war 

9 


First  Session — Monday  Morning 


stimulus.  This  increase  of  trade  bids  fair  to  awaken  other 
lethargic  industries — to  encourage  the  lumber  industry,  and  build- 
ing operations,  for  instance. 

The  Dearth  of  Shipping 

But  there  are  numerous  obstacles  in  the  way  of  our  inter- 
national trade.  The  European  war  not  only  eliminated  the  two 
largest  merchant  fleets  from  active  commerce — leaving  an  interior 
port,  Cleveland,  Ohio,  as  the  headquarters  of  the  world's  largest 
line  of  steamers  actually  engaged  in  trade — but  it  swept  from  the 
seas  all  merchant  vessels  of  the  nation  that  was  second  in  ocean- 
trafficking-power.  The  combined  merchant  marine  of  the  United 
States  has,  of  course,  stood  second  among  the  nations  of  the 
world  for  a  great  many  years,  but  since  a  large  part  of  its  ton- 
nage has  been  confined  to  the  Great  Lakes,  and  another  consider- 
able section  has  been  occupied  in  coastwise  and  river  navigation, 
we  have  had  relatively  few  ships  in  the  overseas  traffic.  Because 
of  the  war  hundreds  of  the  principal  ships  of  other  countries 
have  been  diverted  from  ordinary  trading  for  use  as  army  trans- 
ports, cruisers,  scouts,  mine-layers  and  supply-ships  for  the  bellig- 
erent armies  and  fleets.  Many  of  the  proud  argosies  of  commerce — 
vessels,  cargoes  and  human  freightage — lie  at  the  bottom  of  the 
ocean.  The  constructive  efforts  of  shipbuilders  have  been  di- 
vided between  the  creation  of  destroyers  and  the  replacement  of 
what  has  been  destroyed.  In  the  United  States  the  ill-advised 
Seamen's  Act,  foolishly  intended  as  a  betterment,  has  had  the 
effect  of  a  flotilla  of  hostile  submarines  directed  against  our  own 
merchant  marine. 

Effect  of  Panama  Canal  on  Trade  Routes 

That  same  world-conflict  which  has  disturbed  and  decimated 
shipping  has  temporarily  prevented  the  Panama  Canal  from  ex- 
erting a  normal  influence  upon  those  readjustments  in  the  trade 
routes  of  the  world  that  were  anticipated  in  times  of  peace.  To 
be  sure,  the  ocean  commerce  between  our  Western  and  our 
Eastern  ports  had  greatly  increased  up  to  the  time  when  the 
recent  earth-slides  interfered  with  the  operation  of  the  Canal; 
and  through  traffic  to  and  from  the  Northern  Orient  had  been 
greatly  facilitated.  But  Australasia,  due  to  the  war,  the  wool 
embargo,  and  the  dearth  of  ocean-carriers,  has  not  yet  turned,  in 
a  wholesale  manner,  to  its  natural  trade  outlet,  the  United  States, 
and  more  particularly  to  the  Eastern  section,  which  the  Canal 
brings  near  as  a  market  for  duty-free  wool,  duty-free  meats,  and 

10 


General  Review  of  Commercial  Conditions 


for  the  other  extensive  primary  products  of  the  vast  and  fertile 
dominions  beneath  the  Southern  Cross.  The  anticipated  heavy 
traffic  between  Europe  and  the  Orient,  via  the  Panama  Canal, 
has  not  as  yet  materialized,  and  the  dearth  of  ocean  carriers  is 
felt  in  our  own  trade  with  China,  Japan,  and  the  West  Coast 
of  South  America,  via  this  route.  The  ending  of  the  war  will  im- 
prove this  situation. 

Trade  Follows  the  Flag,  the  Investment,  the  Loan 

Long  ago  we  accepted  the  truism  that  "trade  follows  the 
flag,"  and  our  own  experience,  both  colonial  and  foreign,  within 
the  past  few  years,  proves  that  trade  "weakens  when  the  flagstaff 
•wobbles.  In  normal  times,  foreign  trade  in  manufactured  goods 
follows  investment  in  the  foreign  country  quite  as  consistently  as 
trade  follows  the  flag.  And  export  trade  not  only  follows  invest- 
ment in  foreign  industrial  and  commercial  enterprises,  but  trade 
follows  the  foreign  loan,  particularly  when  the  buying  of  a  cer- 
tain amount  of  goods  in  the  creditor  country  is  stipulated,  as  is 
the  general  practice  among  the  nations — a  practice  sometimes  dis- 
regarded by  such  underwriters  as  think  too  much  of  quick  com- 
missions and  too  little  of  permanent  benefit  to  the  home  country. 
The  entrance  of  some  of  our  leading  banking  concerns  into  the 
field  of  foreign  financing  tends  to  safeguard  the  general  interests 
in  this  respect.  Plans  for  closer  cooperation  in  this  matter  be- 
tween bankers  and  exporting  manufacturers  are  being  developed. 
A  monumental  corporation  for  international  financing  affords 
the  promise  of  helpful  achievements. 

Stoppage  of  European  Investments  Abroad 

The  sudden  cessation  of  foreign  and  colonial  financing — ex- 
cept for  the  financing  of  the  immediate  necessities  of  the  con- 
flict— by  the  European  peoples  now  at  war,  has  left  a  remarkable 
hiatus  in  the  funds  available  for  the  upbuilding  of  the  unde- 
veloped nations  and  colonies  of  the  earth.  Before  the  war,  the 
rate  of  foreign  investment  by  the  countries  of  Western  Europe 
was  at  least  $1,500,000,000  per  annum.  Every  continent  drew 
upon  that  compact  group  of  states  for  the  wherewithal  of  in- 
dustrial expansion.  British  investments  abroad  totaled  $17,500,- 
000,000;  French  foreign  investments,  $8,000,000,000;  German 
foreign  investments,  $5,000,000,000.  Belgium  had  $250,000,000 
invested  in  Russia  alone,  and  the  outflow  of  Belgian  capital  to 
China,  Persia,  Africa,  South  America,  and  to  other  quarters  of 

11 


First  Session — Monday  Morning 


the  earth,  was  noteworthy.    Italy  and  Austria,  too,  were  heavy 
exporters  of  capital. 

With  the  coming  of  the  war,  the  belligerent  nations  re- 
stricted loans  to  their  colonies  and  dependencies  to  the  most  im- 
perative requirements  only.  European  investment  abroad  virtually 
ceased.  Stocks  and  bonds  of  foreign  investment  enterprises,  pre- 
viously held,  were  to  a  large  extent  resold  to  the  foreign  nationals, 
and  the  process  still  continues. 

The  United  States  as  an  Investor  Nation 

Coincident  with  the  business  revival  of  1896,  Americans 
began  to  re-purchase  from  Europe  stocks  and  bonds  of  our  own 
railways,  and  the  stock  control  of  railroads  like  the  Illinois  Cen- 
tral, the  Pennsylvania,  the  New  York,  Ontario  and  Western,  the 
Louisville  and  Nashville,  and  the  Reading,  favored  by  the  for- 
eign investor,  passed  into  American  hands.  Before  the  close 
of  the  nineteenth  century  we  began  to  invest  heavily  in  foreign 
enterprises — the  London  tubes,  Swiss  municipal  bonds,  and  so 
forth,  while  American  investments  in  Canada,  Mexico,  China,  and 
other  countries  began  to  assume  very  extensive  proportions,  our 
investments  in  Mexico  predominating.  The  time  has  now  ar- 
rived when  the  United  States  is  taking  its  place  as  a  premier  in- 
vestor nation,  and  for  the  first  time  our  actual  holdings  of  foreign 
securities  exceed  in  amount  the  total  of  American  securities  held 
abroad.  Our  export  of  capital  has  suddenly  become  larger  than 
that  of  Great  Britain  in  its  palmiest  days  before  the  war. 

And,  within  the  same  year,  London,  which  succeeded  Amster- 
dam as  the  world's  financial  center  at  the  close  of  the  Napoleonic 
Wars,  and  for  a  century  has  held  undisputed  sway,  hands  over  the 
golden  sceptre,  temporarily,  at  least,  to  New  York. 

Banks  and  Railroads  Enter  Foreign  Field 

With  the  entrance  of  the  United  States  into  large-scale  finan- 
cing abroad,  some  of  our  leading  banks  and  railroads  have  been 
familiarizing  themselves  with  the  foreign  field,  or  have  actually 
established  foreign  branches  or  connections.  This  movement 
commenced  before  the  European  war  was  upon  us,  but  the 
present  times  are  in  many  ways  especially  propitious  for  such 
enterprises.  Several  years  ago  the  annual  output  of  the  manu- 
facturing industries  of  the  United  States  began  to  exceed,  in 
money  value,  the  combined  annual  output  of  any  two  other  nations 
of  the  earth;  and  the  factory  production  of  the  members  of  the 
National  Association  of  Manufacturers,  alone,  began  to  exceed 

12 


General  Review  of  Commercial  Conditions 


the  total  annual  production  of  any  single  foreign  nation.  The 
development  of  our  country  having  reached  a  certain  stage,  the 
domestic  production  began  to  go  vastly  beyond  the  home  require- 
ments, and  a  foreign  outlet  for  the  surplus  became  imperative. 

Pioneering  Export  Trade 

This  situation  had  been  foreseen  by  leaders  in  the  National 
Association  of  Manufacturers,  who  had  organized  that  body,  in 
1895— over  twenty  years  ago — for  the  chief  purpose  of  promoting 
our  foreign  trade.  It  was  somewhat  later  before  the  Association's 
activities  were  broadened  to  include  the  relations  between  the 
employer  and  employee,  general  industrial  betterment  and  other 
departments. 

At  a  hearing  before  the  U.  S.  Industrial  Commission,  in  Wash- 
ington, March  4,  1899,  Mr.  Theodore  C.  Search,  then  President 
of  the  N.  A.  M. — and  he  is  present  at  this  Conference — reviewed 
the  Association's  efforts  for  the  promotion  of  foreign  trade  and 
described  how  it  had  worked  for  the  establishment  of  a  U.  S. 
Department  of  Commerce;  for  the  reform  and  improvement  of 
our  consular  service  so  that  it  would  render  assistance  to  Amer- 
ican manufacturers  and  merchants;  for  the  placing  of  the  con- 
sular system  under  the  proposed  U.  S.  Department  of  Commerce; 
for  enabling  the  establishment  of  foreign  banking  facilities 
through  American  banks,  particularly  in  South  America  and  the 
Orient;  for  government  protection  to  the  dyestuffs  industry;  for 
industrial  schools,  separate  from,  but  allied  with,  the  public 
schools  system,  to  train  workmen  to  compete  with  the  skilled  for- 
eign artisans;  for  commercial  education,  by  means  of  special 
schools ;  for  the  construction  of  the  Nicaraguan  Canal — the  route 
then  favored,  and  still  favored  by  many  people;  for  the  upbuild- 
ing of  a  mercantile  marine  under  the  American  flag,  with  subsidies 
to  cover  the  extra  cost  of  American  ship-labor.  (In  those  days, 
we  remember,  one  was  obliged  to  go  via  Europe,  when  traveling 
to  farther  South  America.) 

How  the  American  manufacturers  pioneered  the  foreign  field, 
either  singly  or  with  such  aid  as  the  National  Association,  the 
Government  departments  and  other  agencies  could  give  them,  is 
common  knowledge.  The  desultory  traffic  of  the  early  years 
became  a  well  developed  campaign  for  the  placement  of  the  grow- 
ing surplus  of  factory  output.  When  domestic  business,  for  rea- 
sons of  the  times,  had  slackened  fearfully  by  the  spring  of  1914, 
the  European  war,  coming  soon  thereafter,  whether  god-send  or 

13 


First  Session — Monday  Morning 


devil-send,  has  furnished  a  much  needed  foreign  trade  for  the 
American  manufacturer,  and  employment  for  the  American  work- 
man. 

Interdependence;  Cooperation 

Without  manufacturing  you  would  have  neither  railroads  nor 
tonnage  for  railroads,  for  whether  you  are  carrying  grain,  timber, 
cotton  or  wool  to  the  mills,  or  coal  or  ores  to  the  furnaces,  it 
is  the  manufacturing  industries  of  the  country  that  furnish  the 
chief  reason  for  the  existence  and  the  growth  of  the  railroads  and 
the  banks.  Conversely,  there  is  such  an  interdependence  of  these 
three  types  of  institution  that  no  one  of  them  could  thrive  with- 
out the  others.  Our  foreign  trade,  therefore,  as  well  as  our 
domestic  trade,  depends  upon  the  mutuality  of  these  three  ele- 
ments, and  for  the  first  time  in  the  history  of  our  export  trade 
we  have  reached  the  point  where  the  hearty  and  extensive  coop- 
eration of  the  railroad  managements,  the  bankers  and  the  manu- 
facturers is  beginning  to  be  seen.  This  is  cause  for  congratu- 
lation. 

Tendency  Toward  Technical  Training  of  Workers 

There  is  little  occasion  to  gloat  over  the  figures  of  our  present 
exports,  if  the  items  are  examined  in  detail.  The  demand  for 
our  raw  materials,  or  provisions,  or  for  manufactured  goods  to 
fill  a  temporary  need,  is  the  outstanding  feature  to  be  noted.  If 
our  export  trade  is  to  acquire  a  more  permanent  character,  it 
have  to  secure  a  firmer  foothold  in  the  supplying  of  machinery 
and  of  other  highly  specialized  manufactures  suited  to  the  con- 
stant demands  of  civilization.  Russia,  Australasia  and  the  Ar- 
gentine will  soon  distance  us  in  the  surplus  production  of  cereal 
and  other  foodstuffs.  The  more  populous  sections  of  the  earth 
will  outdo  us  in  the  volume  of  manual  labor  that  may  be  per- 
formed. The  growing  popularity  of  the  industrial  continuation 
school  as  a  means  for  affording  technical  training  to  the  masses 
of  our  citizenry  may  insure  us  a  permanent  place  as  world-sup- 
pliers of  certain  products,  as  no  other  plan  will.  This  is  the 
lesson  which  Europe  offers.  The  matter  is  of  prime  importance 
to  our  workmen,  and,  secondarily,  to  our  manufacturers,  but  it  is 
also  a  movement  to  be  earnestly  promoted  by  all  who  are  inter- 
ested in  the  growth  and  the  stability  of  our  trade. 

Export  Trade  Schools  and  Courses 

Further  signs  of  commercial  preparedness  are  not  lacking. 
The  export  trade  school  is  a  natural  outgrowth  of  the  demand  for 

14 


General  Review  of  Commercial  Conditions 


a  broader  knowledge  of  foreign  trade  conditions  and  methods. 
Such  a  school  was  inaugurated  by  the  National  Association  of 
Manufacturers  a  few  years  ago,  and  was  successfully  conducted, 
but  was  abolished  as  soon  as  our  great  institutions  of  learning 
began  to  take  an  effective  interest  in  the  topic  and  established 
supplementary  evening  courses  to  meet  the  new  requirements. 
The  scope  of  these  courses  is  designed  to  be  extremely  practical. 
A  group  of  evening-school  students,  who  in  their  daily  employ- 
ments are  dealing  with  the  practical  problems  of  export,  finds  the 
customary  text-books  on  industrial  and  commercial  geography, 
for  instance,  strangely  lacking  in  some  of  the  matter  that  is  of 
most  importance  to  the  trader.  The  usual  texts  are  exceedingly 
deficient  in  the  detailed  treatment  of  machinery  as  a  factor  in 
commerce.  They  treat  mainly  of  raw  materials — iron  ores,  wheat, 
raw  cotton,  etc. — factors  which  bulk  large  in  the  world's  com- 
merce, but  which  do  not  offer  the  abundant  difficulties  in  trade 
promotion  and  trade  competition  that  are  encountered  in  extend- 
ing sales  of  manufactured  goods — the  raw-materials-group  of 
articles,  generally  speaking,  flows  more  naturally,  and  with  less 
circumstance,  toward  the  localities  where  such  goods  are  needed ; 
the  manufactured  goods  may  require  for  their  introduction  in 
the  new  territory  much  detailed  study  of  local  needs,  much  pro- 
motive  and  educative  effort.  The  more  highly  the  goods  are 
treated  or  modified  in  the  plants  of  the  manufacturers — for  ex- 
ample, machine-tools — the  more  the  trader  needs  to  know  about 
them  and  their  adaptability  to  the  conditions  to  be  found  in  vari- 
ous localities  of  the  earth.  Furthermore,  goods  are  sold  to  the 
majority  of  foreign  peoples  under  very  special  conditions  (to  us 
most  peculiar),  and  by  very  special  methods.  Broadening  in- 
formation and  helpful  advice  may  be  furnished  to  the  novice 
through  the  export  trade  school.  No  one  expects  it  to  be  a  substi- 
tute for  the  school  of  experience. 

Improvement  of  Foreign  News  Service 

Trade  of  any  kind,  world-trade  in  particular,  requires,  in- 
cessantly, the  getting  and  the  giving  of  information.  The  con- 
stant improvement  of  the  means  for  the  interchange  of  commercial 
facts  with  other  nationals  is  essential  to  the  rational  expansion 
of  international  trade.  The  government  of  the  United  States  and 
our  leading  organizations  and  financial  institutions  have  lately 
increased  the  facilities  for  the  interchange  of  such  information. 
Our  industrial  news  service  to  other  countries  is  being  facilitated 

15 


First  Session — Monday  Morning 


through  the  same  agencies.  Perhaps,  at  no  distant  time,  even 
our  own  Philippines  may  be  accorded  a  commercial  news  service 
that  will  enable  the  newspapers  in  those  islands  to  secure  cabled 
press  information  supplemental  to  that  which  is  now  derived  from 
a  foreign  agency,  or  from  the  meager  bulletins  that  are  released 
by  the  executive  offices  of  the  Government. 

Send  Direct  Representatives 

It  is  coming  to  be  more  throughly  understood  that  the 
American  manufacturer  who  desires  to  build  up  his  foreign  trade 
must  send  his  own  representative  direct  to  the  foreign  country,  to 
push  the  sales,  to  furnish  detailed  and  intimate  information  as 
to  the  character  and  the  capabilities  of  the  product  and  the  fa- 
cilities of  his  house  for  making  adjustments  or  readjustments,  and 
to  cooperate  with  whatever  local  agents  may  be  appointed.  This 
plan  is  becoming  recognized  as  the  safest  way  of  building  up 
permanent  trade.  And  no  other  kind  is  worth  while. 

Coming  Adjustments 

Producers  everywhere  are  keenly  alive  to  the  tariff  and  manu- 
facturing readjustments  to  be  faced  after  the  war.  The  probable 
low  cost  of  labor  in  certain  foreign  countries  is  to  some  a  cause 
of  apprehension;  others  believe  that  the  skilled  labor  of  the  bel- 
ligerent nations  has  been  demoralized  and  damaged  immeasur- 
ably. That  machinery  will  be  used  more  and  more  to  assist  pro- 
duction is  a  settled  conclusion.  To  some  persons  the  dyestuffs 
situation,  the  foreign  embargo  on  wool  and  other  commodities, 
and  the  dumping  probabilities,  emphasize  the  necessity  for  tariff 
readjustments ;  on  the  other  hand  there  is  an  appreciation  of  the 
fact  that  an  investor  nation  must  have  large  importations  of 
goods.  Self-sufficiency  in  the  providing  of  our  own  requirements 
is  strongly  advocated  by  some  individuals;  others  realize  that  no 
nation  can  be  fully  self-dependent — that  a  division  of  labor  among 
the  nations,  each  excelling  in  its  own  specialties,  is  as  necessary 
as  is  the  customary  division  of  labor  in  the  productive  activities 
of  the  home  country.  Certainly,  trade  cannot  long  remain  one- 
sided. We  must  buy  from  others  as  well  as  sell  to  them.  There 
must  be  a  middle  ground  between  self-sufficiency  and  cooperation. 

International  Cooperation — World  Service 

At  a  time  when  peoples  of  the  earth  are  using  more  metal 
for  the  purpose  of  hurling  deadly  missiles  at  each  other,  than  was 
employed  in  the  entire  arts  and  sciences  of  civilization  from  the 

16 


Address  of  Baron  Jacques  de  Neuflize 


beginning  of  the  world  down  to  the  discovery  of  America,  it  may 
not  seem  apropos  to  refer  to  international  cooperation.  And  yet 
the  war  itself  furnishes,  on  the  one  side  and  on  the  other,  a  most 
thorough  exemplification  of  international  cooperation.  Indeed,  we 
are  looking  forward,  with  earnest  expectation,  to  the  time  when 
there  shall  be  no  two  sides  to  the  question  of  war — when  the 
great  world-family  of  nations  will  unite  to  restrain  international 
strife  as  a  species  of  civil  war  that  is  inimical  to  the  welfare  of 
the  world  community,  and  to  be  suppressed  by  the  common  con- 
sent and  by  the  common  machinery,  just  as  we  now  call  upon  the 
fire  department  to  extinguish  an  incipient  conflagration,  or  the 
police  department  to  suppress  a  riot. 

The  international  trader,  going  up  and  down  the  earth,  is 
the  advance  agent  of  a  developing  civilization,  conveying  to  us  the 
peaceful  practices  and  ideas,  the  discoveries,  and  the  products, 
of  other  intelligent  and  industrious  peoples;  or  carrying  to  the 
furthermost  parts  of  the  earth  the  refinements  of  our  own  civili- 
zation. International  trade,  in  its  higher  aspects,  means  world- 
service. 


THE  CHAIRMAN  :  We  will  next  hear  from  Baron  Jacques  de 
Neuflize,  a  member  of  the  well  known  banking  house  of  de 
Neuflize  &  Company  of  Paris.  He  comes  to  this  country  with  a 
double  mission,  one  as  a  delegate  from  the  leading  chamber  of 
commerce  in  France  to  this  Conference;  the  other  as  a  member 
of  the  French  Commercial  Commission  now  in  this  country. 

I  have  the  pleasure  of  introducing  to  you  Baron  Jacques  de 
Neuflize.  (Applause.) 

Address  of  Baron  Jacques  de  Neuflize 

Delegate  of  the  Chamber  of  Commerce  of  Paris 

M.  le  President:  La  Chambre  de  Commerce  de  Paris  m'a 
fait  Thonneur  de  me  charger  de  vous  apporter,  a  1'ouverture  de 
ce  congres,  ses  compliments  et  ses  voeux. 

The  Chamber  of  Commerce  of  Paris  has  not  forgotten  the 
response  they  received  from  the  American  organizations  at  the 
Conference  of  June,  1914,  in  Paris,  and  the  important  part  which 
the  American  delegates  took  in  that  conference.  Scarcely  had 
the  conference  finished  when  the  war  broke  out. 

We  are  still  fighting  for  our  right  to  exist  as  a  nation,  but  in 
the  meanwhile  the  chambers  of  commerce  of  France,  and  the  most 
important  of  them,  the  Chamber  of  Commerce  of  Paris,  have  not 

17 


First  Session — Monday  Morning 


given  up  their  work.  We  are  looking  ahead  for  the  better  times 
to  come. 

The  first  few  days  were  fraught  with  darkness  and  uncer- 
tainty caused  by  the  unexpected  mobilization.  The  sudden  call 
away  from  their  normal  activities  of  the  greatest  part  of  our 
young  male  population  presented  a  problem  not  so  simple  of 
solution.  But  very  quickly  those  who  remained  behind,  with  a 
proper  feeling  of  their  duty  to  the  men  who  were  fighting,  pulled 
themselves  together,  and  now  French  trade  and  industry  have 
had,  taking  into  account  what  we  had  to  undergo,  the  most  won- 
derful recovery.  This  justifies  our  confidence  in  the  future  and 
increases  our  determination  to  work. 

Now,  the  trade  between  our  two  countries  is  bound  to  develop 
by  leaps  and  bounds  and  that  is  why,  besides  the  natural  wish  to 
accept  an  invitation  of  an  Association  of  the  importance  of  yours, 
the  Chamber  of  Commerce  of  Paris  is  exceedingly  interested  in 
the  discussion  of  these  next  few  days.  May  they  lead  you  to  a 
new  development  of  American  international  trade,  and  taking 
our  own  point  of  view,  of  your  trade  with  our  country. 

I  ask  you  to  allow  me  to  add  a  few  personal  remarks. 

It  seems  so  wonderful  to  me.  A  month  ago  I  was  suddenly 
recalled  from  the  front  by  the  French  Government  to  come  and 
join  here  the  French  economic  mission,  of  which  you  have  already 
heard.  It  seems  such  a  contrast  to  be  suddenly  working  on 
matters  of  trade  and  peace.  And  that  is  why  I  cannot  help  men- 
tioning how  grateful  I  am  for  all  the  demonstrations  of  sympathy 
I  and  my  confreres  have  received  since  our  arrival  here.  I  have 
been  deeply  moved  by  all  you  Americans  have  done  to  relieve  the 
sufferings  caused  by  this  war,  but  most  of  all  by  the  way  in 
which  you  did  it.  I  knew  of  many  qualities  of  the  Americans. 
I  did  not  include  in  them  modesty.  But  you  have  shown  such 
a  modesty  in  your  work.  The  only  reference  I  ever  heard  from 
Americans  as  to  what  they  were  doing  was  their  regret  that  they 
were  doing  so  little.  In  the  light  of  what  you  have  actually  done 
and  are  still  doing  it  astounded  me — it  astounds  me  so  much  that 
I  cannot  express  as  I  would  like  my  gratitude. 

Mr.  Chairman,  in  the  name  of  the  Chamber  of  Commerce 
of  Paris  I  wish  you  good  luck  and  good  results  from  the  work 
of  the  conference  which  opens  to-day. 


THE  CHAIRMAN  :  The  Russian- American  Chamber  of  Com- 
merce is  a  body  organized  by  a  number  of  the  most  prominent 

18 


Russia — Alexander  W.  Behr 


business  men  in  Moscow,  with  whom  our  Consul-General  at  Mos- 
cow, Mr.  Snodgrass,  has  cordially  cooperated.  The  Chamber 
since  its  organization  has  been  very  active  in  seeking  to  promote 
more  direct  trade  relations  between  Russia  and  the  United  States, 
and  the  gentleman  who  will  now  address  you  is  in  this  country 
partly  for  the  purpose  of  continuing  this  good  work. 

I  have  the  pleasure  of  introducing  to  you  as  the  next  speaker, 
Mr.  Alexander  W.  Behr,  Vice-President  and  delegate  of  the 
Russian-American  Chamber  of  Commerce  of  Moscow. 

Address  by  Alexander  Wladimirowitch  Behr 

Vice-President  and  Delegate  of  the  Russian-American  Chamber  of  Commerce  of  Moscow 

Mr.  President,  Members  of  the  National  Association  of 
Manufacturers,  Honorable  Guests :  The  Russian-American  Cham- 
ber of  Commerce  of  Moscow,  whose  constitution  and  by-laws 
were  graciously  attested  and  signed  by  H.  I.  M.  the  Emperor  of 
Russia  under  date  of  May  24,  1913,  and  whose  vice-president  I 
have  the  honor  to  be,  appointed  me  as  its  delegate  to  this  conven- 
tion with  the  request  to  put  before  you  gentlemen  the  vast  possibil- 
ities and  numerous  advantages  of  closer  commercial  and  financial 
relations  between  the  great  Republic  and  the  great  Empire. 

In  all  history  there  is  no  precedent  for  America's  present 
achievement  in  rising  to  the  highest  rank  and  gaining  economic 
and  financial  superiority  in  so  short  a  space  of  time.  Evolution 
so  great  as  this  heretofore  has  come  only  as  a  result  of  continuous, 
energetic  and  intelligent  effort  extending  over  scores  of  years.  In 
your  case,  however,  the  European  war  brought  about  this  evolu- 
tion so  spontaneously  and  unexpectedly  that  a  question  of  tre- 
mendous importance  rises  before  you — the  question  of  the  best 
policy  to  retain  and  further  develop  the  advantages  gained  by 
this  evolution. 

It  is  not  my  intention,  gentlemen,  to  attempt  to  instruct  you 
or  to  warn  you,  and  I  beg  you  not  to  interpret  my  words  in  that 
way.  It  is  only  that  I  foresee  grave  problems  before  you  which 
you  must  overcome  if  you  are  to  retain  that  advantage  and  that 
I  cannot  but  foresee  that  to  accomplish  this  you  will  be  contem- 
plating the  enlargement  of  your  foreign  markets.  Even  now  one 
can  observe  in  many  instances  your  efforts  to  fundamentally  study 
the  foreign  markets  and  to  investigate  their  possibilities  for  your 
products  in  order  that  you  may  retain  in  the  future  the  high  rank 
you  now  hold.  I  have  not  the  least  doubt  that  this  very  im- 

19 


First  Session — Monday  Morning 


portant  problem  will  be  successfully  solved  with  your  usual  energy 
and  efficiency. 

You  Americans  do  well  to  hold  high  the  banner  with  the 
slogan,  "Honesty,  Fairness  and  Frankness";  and  I  believe  that 
to  the  steadfastness  with  which  you  have  followed  it  is  due  half 
your  victory.  I  have  had  the  great  honor  and  pleasure  of  meet- 
ing the  best  of  your  best  men,  and  it  was  with  a  sense  of  profound 
satisfaction  that  I  observed  the  frankness  with  which  they  con- 
versed with  me,  a  stranger  to  them.  This  gives  me  the  privilege 
to  reciprocate  and  to  put  before  you  to-day  not  less  frankly  my 
views  on  the  prospects  of  future  trade  between  Russia  and  your 
country.  I  have  no  doubt  that  this  trade  will  bring  with  it  profits 
and  advantages  not  only  to  my  country  but  in  no  less  degree  to 
yours  as  well. 

Scarcely  more  than  a  year  ago,  on  a  previous  visit  to  your 
country,  I  was  amazed  to  observe  the  intense  state  of  depression 
which  existed  here.  Everywhere  was  gloom,  despondency,  al- 
most despair.  The  tremendous  shock  caused  by  the  opening  of 
the  war  in  Europe  with  the  complete  upsetting  of  foreign  trade 
and  financial  relations  apparently  led  many  thinking  men  to  be- 
lieve that  America  was  bound  to  suffer  fully  as  much  in  its 
business  and  financial  affairs  as  any  of  the  great  nations  which 
had  plunged  directly  into  war. 

But  that  there  were  some  far-seeing  men  who  adopted  a 
perspective  which  enabled  them  to  peer  into  the  future  and  weigh 
the  probable  compensating  factors  became  apparent  upon  my 
return  to  your  country  two  months  ago.  What  a  transformation ! 
Prosperity  returning  rapidly;  wheels  in  every  factory  turning, 
some  by  night  as  well  as  by  day;  securities  which  had  been  all 
but  spurned  at  any  price  a  year  before  mounting  to  record  figures, 
those  of  one  group  of  twenty-five  industrials  on  your  New  York 
Stock  Exchange  having  advanced  in  value  during  that  period  by 
more  than  a  thousand  million  dollars.  In  the  first  ten  months  of 
the  present  year  I  found  your  imports  of  gold  had  exceeded  ex- 
ports by  more  than  $170,000,000  and  that  in  the  same  period  you 
had  piled  up  a  trade  balance  of  approximately  fifteen  hundred 
million  dollars.  When  one  realizes  that  the  heaviest  excess  of 
exports  in  any  previous  full  year  was  $691,000,000  and  that  that 
figure  was  regarded  as  extraordinary  at  the  time,  the  figures  for 
the  present  year  must  be  looked  upon  as  nothing  short  of  amaz- 
ing. But,  gentlemen,  if  you  are  prepared  to  take  full  advantage 
of  the  opportunities  which  lie  before  you  now  there  is  reason  to 

20 


Russia — Alexander  W.  Behr 


believe  that  not  only  will  your  great  prosperity  continue  but  that 
it  will  grow  greater  and  greater  year  by  year.  With  your  in- 
creasing wealth  and  prestige  you  will  reach  out  further  and 
further  beyond  the  seas  and  the  harvest  you  will  reap  will  be 
limited  only  by  the  extent  of  your  endeavors. 

In  the  great  country  from  which  I  come  to  you  America  has 
always  been  looked  upon  with  a  great  feeling  of  friendship.  It 
it  not  necessary  for  me  to  recount  to  you  evidences  of  the  long 
sustained  friendship  which  the  people  of  Russia  have  borne  to- 
ward your  country.  Your  own  history  tells  the  story  to  you. 
Remember  two  instances  in  the  year  1812  and  the  third  one 
during  the  Civil  War. 

Russia's  Natural  Resources 

Russia,  with  her  180,000,000  people  scattered  over  one-sev- 
enth of  the  earth's  surface,  has  such  a  store  of  natural  resources 
awaiting  development  as  can  be  found  nowhere  else  in  the  world. 
According  to  an  estimate  by  Professor  Loutugine  in  1914  Rus- 
sia has  a  reserve  of  some  250,000,000,000  tons  of  coal.  She  has 
countless  millions  of  tons  of  iron  and  copper,  gold  and  silver, 
platinum,  lead,  manganese,  mercury,  nickel  and  other  metals. 
Her  oil  fields,  as  yet  only  partially  developed,  stand  second  in 
production  in  all  the  world;  and  in  her  forests,  which  cover  one- 
fourth  of  the  Empire's  vast  area,  is  the  world's  reserve  of  timber. 
And  above  all  Russia  produces  an  unlimited  supply  of  materials 
demanded  by  America,  such  as  hides,  skins,  bristles,  furs,  wool, 
etc.,  etc. 

Russia  can  furnish  all  the  raw  material,  all  the  operating 
energy  and  all  the  labor  required,  not  only  to  supply  her  own  great 
home  markets  but  many  other  European  markets  as  well. 

So  you  see  it  is  not  as  an  applicant  asking  favors  that  Russia 
has  to  come;  rather  she  comes  bearing  gifts  such  as  none  other 
can  give.  She  holds  out  this  opportunity  because  Russia  is  your 
friend  and  because  you  are  Russia's  friend.  Neither  has  a 
political  "axe  to  grind"  and  when  American  dollars  come  to  Rus- 
sia for  investment  they  have  no  political  taint  upon  them.  It 
is  to  America  alone  of  all  the  world  that  Russia  can  look  for 
capital  without  some  political  motive  behind  it;  and  Russia  is 
done  forever  with  the  political  rouble  which  has  controlled  her  in- 
dustries in  the  past. 

To  make  my  point  clear,  let  me  summarize  briefly  our  in- 
dustrial situation  before  the  outbreak  of  the  present  war. 

21 


First  Session — Monday  Morning 


Russia's  Imports 

In  our  imports  Germany  had  a  very  large  share.  In  the 
year  1913,  for  instance,  of  Russia's  total  purchases  of  simple  iron 
and  steel  amounting  to  $10,630,579  Germany  supplied  $8,410,341, 
while  from  America  came  only  the  value  of  $137,542.  In  simple 
machinery  of  iron  and  steel  amounting  to  $18,747,730  Germany 
supplied  $14,626,050  and  America  $211,342. 

Other  imports  included : 

Pig  iron  manufactures,  total,  $1,721,274;  from  Germany,  $i,- 
366,  837 ;  from  America,  $20,553. 

Manufactures  of  copper  alloys,  total,  $5,306,686;  from  Ger- 
many, $4,708,065;  from  America,  $15,136. 

Tin  plate  manufactures,  total,  $3,015,333;  from  Germany, 
$2,653,491;  from  America,  $15,631. 

Metal  working  machinery,  total,  $6,585,616;  from  Germany, 
$5,488,934;  from  America,  $244,405. 

Dynamos  and  electrical  motors,  total,  $5,008,348;  from  Ger- 
many, $4,431,762;  from  America,  $14,180. 

Parts  of  machinery  and  apparatus,  total,  $9,559,144;  from 
Germany,  $6,966,330;  from  America,  $601,254. 

Electrical  appliances,  total,  $3,506,284;  from  Germany,  $3,- 
196,215;  from  America,  $51,576. 

Musical  instruments,  total,  $3,395,279;  from  Germany,  $3,- 
020,612;  from  America,  $10,390. 

Motor  cars  and  trucks,  total,  $8,951,095 ;  from  Germany,  $7,- 
102,264;  from  America,  $300,760. 

These  examples  have  been  selected  at  random  and  are  repre- 
sentative of  the  conditions  which  existed  throughout  the  entire 
list  of  articles  imported  into  Russia.  They  are  enumerated  not 
only  to  show  the  evil  effects  of  political  capital  investments  in  our 
country,  but  also  to  show  the  great  volume  of  imports  which 
would  be  unnecessary  if  our  own  resources  were  properly  de- 
veloped. With  American  capital  and  genius  operating  our  mines 
and  our  factories  with  the  cheap  and  efficient  labor  procurable 
in  Russia,  this  immense  volume  of  trade  could  be  made  to  originate 
and  end  within  the  Empire  to  the  great  profit  of  the  investors. 
With  our  protective  tariff,  the  low  cost  of  labor  and  your  efficient 
manufacturing  methods  there  would  be  no  fear  of  competition 
from  any  quarter. 

Aside  from  the  political  influences,  the  dominating  reason  for 
the  great  excess  in  our  imports  from  Germany, as  compared  with 
other  countries  has  been  also  the  low  cost  of  manufacture  in  Ger- 

22 


Russia — Alexander  W.  Behr 


many  owing  to  the  low  rate  of  wages  which  existed  in  that  coun- 
try. That,  however,  is  a  condition  which  henceforth  will  be 
altered.  With  the  tremendous  burden  of  taxation  which  must 
fall  upon  the  German  people  as  a  result  of  the  present  war  the 
whole  mode  of  living  in  that  country  must  be  changed.  Taxes 
imposed  must  be  paid  and  in  order  to  pay  them  workmen  must 
receive  far  higher  wages  than  have  prevailed  in  the  past.  With 
the  cheap  and  efficient  labor  to  be  obtained  in  Russia  she  herself 
should  be  by  far  the  strongest  competitor  for  her  own  home  mar- 
kets, and  even  for  German  and  other  European  markets,  against 
German  or  any  other  competition. 

I  am  debarred  from  speaking  to  you  upon  a  subject  which 
could  not  but  throw  great  light  upon  the  situation  I  am  endeavor- 
ing to  put  before  you.  But  as  a  visitor  to  your  neutral  country 
I  do  not  feel  at  liberty  in  any  way  to  discuss  the  war  in  which  my 
country  is  now  involved.  I  can,  for  this  reason,  say  to  you  only 
that  I  am  a  Russian,  that  I  cannot  but  feel  with  all  my  heart  and 
soul  for  Russia,  that  I  believe  implicitly  in  Russia,  and  that  I  am 
proud  to  be  of  a  nation  which  in  the  fearful  struggle  in  which 
she  has  been  engaged  has  won  within  her  borders  a  momentous 
victory  over  herself. 

Russia's  Economic  Measures  and  Progress 

By  a  single  stroke  of  the  pen  which  placed  a  prohibition  upon 
the  manufacture  and  sale  of  liquor  the  people  of  Russia  have  been 
relieved  of  a  yoke  of  slavery  more  terrible  than  any  other  slavery 
that  ever  existed.  Our  people  have  been  redeemed.  Our  coun- 
try has  been  rejuvenated.  Our  moral  and  physical  strength  has 
been  increased  an  hundred  fold.  By  that  scratch  of  the  pen  Rus- 
sia relinquished  an  income  of  one  thousand  millions  of  roubles  a 
year ;  but  by  the  same  act  she  reclaimed  millions  of  men  and  as- 
sured freedom  and  happiness  and  prosperity  to  countless  millions 
to  come. 

The  increased  efficiency  and  production  of  the  Russian  work- 
man since  the  commencement  of  the  war  is  almost  incredible. 
Personally  I  know  of  manufacturing  plants  employing  20,000  to 
30,000  men  where,  despite  the  fact  that  10  to  15  per  cent,  of 
the  workers  have  been  called  to  arms  and  their  places  not  filled, 
the  production  of  the  plants  has  not  diminished. 

It  is  not  to  patriotism  alone  that  this  is  due.  The  pro- 
hibition of  liquor  has  had  a  large  part  in  bringing  about  this  re- 

23 


First  Session — Monday  Morning 


suit;  and  the  situation  will  continue  to  improve,  assuring  steady, 
dependable  labor  of  the  highest  class  in  our  industries. 

Thus,  with  efficient,  high-class  labor  which  can  be  employed 
at  wages  averaging  only  25  per  cent,  of  the  rate  paid  in  America, 
with  an  inexhaustible  store  of  all  the  raw  materials,  coal  and 
water-power,  those  who  come  to  develop  our  resources,  having 
the  whole-hearted  support  of  our  people,  cannot  but  reap  a  splen- 
did reward. 

In  the  past  only  two  representative  American  companies — the 
International  Harvester  Company  and  the  Singer  Sewing  Ma- 
chine Company — have  made  a  determined  and  continued  effort 
to  produce  their  goods  in  Russia  for  the  Russian  market.  Both 
of  them  have  established  themselves  there  on  a  firm  and  profit- 
able basis. 

Russia  as  a  Field  for  Investment 

With  the  far  more  favorable  conditions  which  now  exist 
every  American  dollar  which  comes  to  Russia  will  find  its  task 
easier  than  did  those  of  the  two  American  pioneers.  It  can  take 
its  profits  in  the  development  of  our  mines,  in  the  extension  of 
our  railroads  to  open  up  millions  of  fertile  acres  to  agriculture, 
in  the  transportation  of  the  products  of  the  soil,  in  the  opera- 
tion of  factories  and  mills  to  supply  the  needs  of  our  180,000,000 
population,  in  the  exports  of  the  products  of  all  our  great  re- 
sources to  other  countries,  in  the  manufacture  in  our  own  fac- 
tories of  such  goods  from  raw  materials  as  we  must  import  from 
America  and  other  countries. 

All  efforts  to  create  closer  relations  between  our  two  great 
countries  are  confronted  with  one  severe  obstacle,  this  being  the 
surprisingly  scant  knowledge  Russians  have  of  America  and 
Americans  of  Russia.  The  Russian- American  Chamber  of  Com- 
merce of  Moscow  was  organized  with  the  main  object  to  largely 
contribute  to  the  spreading  of  such  knowledge  in  both  countries. 

My  mission  in  America  is  to  establish  a  Russian-American 
Chamber  of  Commerce  in  your  country,  which,  cooperating  with 
the  Chamber  in  Moscow  and  its  branches,  is  to  become  a  source 
of  authentic  information,  the  channel  for  conveying  mutual  un- 
derstanding. I  am  sparing  no  efforts  and  energy  to  obtain  as 
leaders  of  this  organization  America's  most  prominent  men  whose 
association  with  our  Chamber  will  prove  to  convince  you  of  the 
final  success  of  our  aims  to  the  advantage  of  both  America  and 
Russia  and  establish  America's  faith  in  this  new  organization. 

24 


Russia — Dr.  Theodor  Kryshtofovich 


I  am  sure  the  result  of  the  activity  of  our  Chamber  in  America  in 
close  cooperation  with  the  Chamber  in  Russia,  will  soon  convince 
you  that  the  data  on  Russia,  mentioned  above  is  authentic,  being 
rather  over-conservative. 

There  need  be  no  intermediary.  We  should  build  up  be- 
tween ourselves  a  direct  commercial,  industrial  and  financial  alli- 
ance based  upon  friendship  and  profit  rather  than  upon  politics 
and  greed. 

Summarizing  all  above  said  we  see  on  the  one  side  Russia 
with  its  fabulous  resources  and  wealth  awakening  to  a  new  in- 
dustrial era;  Russia,  whose  capital,  enormous  as  it  is,  is  never- 
theless insufficient  for  a  development  called  for  so  spontaneously ; 
and  on  the  other  side  America,  which  over  night  accumulated 
capital  so  vast  that  it  is  forced  to  go  abroad  to  seek  for  new 
markets  for  its  investment.  Considering  this,  it  is  only  natural 
that  our  two  countries  should  desire  cooperation  with  each  other, 
as  such  cooperation  cannot  but  bring  profits  and  advantages  to 
both. 

A  long  experience  in  commercial  business  and  many  years  of 
association  with  prominent  American  business  men  has  convinced 
me  that  one  of  the  most  important  requisites  of  any  success  is  to 
guard  not  only  one's  own  interests  but  those  of  one's  associates 
as  well.  There  must  be  present  always  a  spirit  of  "give  and 
take"  if  one  is  to  achieve  absolute  success  and  at  the  same  time 
to  build  up  intimate  and  lasting  friendships.  And,  gentlemen, 
intimate  and  lasting  friendship  should  be  the  aim  of  our  two 
great  countries,  because  such  a  cordial  alliance  will  become  a 
power  that  will  govern  the  world. 


THE  CHAIRMAN  :  With  the  consent  of  the  next  speaker  on 
the  program  and  presuming  upon  your  consent,  I  wish  to  intro- 
duce to  you  Df.  Theodor  Kryshtofovich,  Special  Agent  of  the 
Russian  Ministry  of  Agriculture,  who  will  address  you  briefly. 
(Applause.) 

Address  of  Dr.  Theodor  Kryshtofovich 

Special  Agent  of  the  Russian  Ministry  of  Agriculture. 

DR.  KRYSHTOFOVICH:  Mr.  President  and  Gentlemen:  I  am 
very  sorry  I  must  talk  unprepared.  I  did  not  expect  to  talk,  and 
Mr.  President  was  so  kind  as  to  invite  me  to  do  it. 

I  take  the  liberty  of  speaking  for  two  countries,  for  Russia 

25 


First  Session — Monday  Morning 


as  well  as  as  America,  because  on  one  side  I  am  an  official  of  the 
Russian  Ministry  of  Agriculture  and  on  the  other  side  I  am  a 
California  farmer. 

For  many  years  I  lived  in  America,  and  I  can  tell  you  that 
I  like  both  of  these  countries,  and  so  I  take  the  liberty  to  talk  for 
both  of  them. 

Mr.  Behr  explained  Russian  resources,  so  that  I  shall  not 
touch  upon  that  question. 

I  would  like,  however,  to  tell  the  gentlemen  that  we  have  so 
much  work  in  our  country,  that,  of  course,  we  would  like  to  help 
you  in  broadening  your  commerce ;  but  I  must  say  you  must  help 
yourselves  in  this  question.  The  main  reason  why  Americans 
are  not  quite  successful  in  our  country  is  that  they  lack  the  Rus- 
sian language.  That  is  the  first  thing.  If  a  foreigner  comes  to 
some  foreign  country  and  wants  to  do  some  business,  he  must 
speak  the  language  of  the  country ;  and  I  do  not  yet  understand, 
if  you  are  introducing  in  your  high  schools  French  and  German 
in  the  East  and  French  and  Spanish  in  the  West,  why  you  would 
not  introduce  the  Russian  language  in  your  high  schools  and  teach 
your  people  that  language  to  your  advantage.  That  is  the  first 
thing. 

Again,  about  the  knowledge  of  the  country.  As  Mr.  Behr 
explained,  it  is  very  scarce  in  America.  Americans,  of  course,  are 
studying  geography  and  the  history  of  America  in  full,  but  about 
other  countries  the  knowledge  is  very  scant.  I  can  speak  on 
that  point  because  my  children  went  through  American  schools 
and  I  know  everything  about  high  schools  and  primary  schools. 

I  spoke  about  history.  The  Russian  history  showed  us  that 
when  Christianity  was  introduced  into  Russia  we  had  no  good 
voices  to  sing  in  the  church,  so  we  invited  the  Italians  to  come 
and  sing  in  our  churches.  Now  we  have  splendid  singers  who  are 
going  everywhere  and  giving  concerts. 

In  the  time  of  Peter  the  Great  we  had  no  skilled  labor;  we 
had  no  scientists ;  and  Peter  the  Great  introduced  scientists  from 
Holland  and  from  Germany  and  from  everywhere.  Again,  Cath- 
erine the  Great  continued  his  work  and  invited  philosophers  and 
doctors  and  scientists.  Now  we  have  philosophers  and  physicians 
and  scientists,  and  so  on. 

The  time  has  come,  however,  when  we  must  teach  our  people 
business ;  and  in  that  line  you  Americans  are  the  first  people  of 
the  earth.  So  I  invite  you  to  come  to  our  country  and  teach  us 
business  and  get  profit  from  it.  I  would  not  like  to  go  into  too 

26 


Trade  Relations  with  Australia 


much  detail,  because  perhaps  your  Honorable  President  would  not 
allow  me  sufficient  time  for  that,  and  I  am  content  only  to  tell 
you  that  there  are  very  many  empty  places  in  Russia  now  in  com- 
mercial lines.  Come  and  take  those  places  fully.  You  have  no 
competition  at  all,  in  the  wholesale  trade,  especially. 

We  Russians  are  a  good  natured  people,  we  are  an  agri- 
cultural people,  but  we  are  not  very  good  traders;  we  are  not 
very  good  commercial  men.  I  must  admit  that.  So,  without 
competition,  you  are  welcome  to  come  to  Russia  with  her  great 
resources  and  do  business  as  much  as  you  want  to. 

I  think  perhaps  that  is  all  that  I  have  to  say  to  you,  gentle- 
men, at  this  time,  and  I  think  that  as  soon  as  you  can  come  to  our 
country  you  will  change  your  opinion  about  us  Russians,  that 
we  are  not  as  civilized  as  another  people,  because  perhaps  some 
historical  conditions  were  against  us,  but  mostly  a  lack  of  knowl- 
edge is  the  reason  for  this.  (Applause.) 


THE  CHAIRMAN  :  The  next  gentlemen  who  will  address  us 
is  Honorable  P.  E.  Quinn,  Deputy  Trade  Commissioner  of 
New  South  Wales.  I  have  the  greatest  pleasure  in  introducing 
to  you  the  Honorable  Mr.  Quinn.  (Applause.) 

MR.  QUINN  :  Mr.  President,  Gentlemen  of  the  Conference 
and  Delegates  from  other  lands :  I  need  hardly  say  that  I  am  de- 
lighted at  this  opportunity  to  meet  the  manufacturing  interests 
of  the  United  States  in  conference. 

You  have  heard  the  representatives  of  some  bjg  countries, 
I  mean  countries  that  are  big,  that  loom  large  politically,  but 
territorially  perhaps  not  as  large  as  Australia. 

One  of  my  missions  here  as  Trade  Commissioner  (I  am  now 
located  in  New  York  with  a  view  to  promoting  the  trade  interests 
of  the  United  States  and  Australia)  is  with  the  endeavor  to  put 
that  little  known  Continent  on  the  map. 

(Following  is  Mr.  Ouinn's  paper  in  full.) 

The  Trade  Relations  Between  the  United  States 
and  Australia 

By  HON.  P.  E.  QUINN, 

Deputy  Trade  Commissioner  for  New  South  Wales 

During  my  stay,  now  extending  over  several  years,  in  the 
United  States,  I  have  frequently  felt  the  lack  of  interest  which 
prevails  in  this  country  regarding  the  Commonwealth  of  Aus- 

27 


First  Session — Monday  Morning 


tralia — a  lack  of  interest  which  is  largely  the  offspring  of  a  want 
of  knowledge  of  Australia.  I  do  not  complain  of  this,  for  it  is 
quite  natural,  and  easily  explainable.  Australia  is  off  the  great 
highways  of  the  old  world  in  travel  and  trade,  and  has  had  to 
make  a  trail  for  itself.  Half  a  century  ago  it  was  known  mainly 
for  its  curiosities  of  animal  and  vegetable  life.  More  recently  it 
was  made  better  known  by  its  endeavors  to  solve  old  and  vexatious 
problems  by  a  program  of  social  and  humanitarian  legislation, 
and  to-day  it  is  achieving  sterner  advertisement  by  the  part  its 
soldiers  and  sailors  are  playing  in  the  great  war.  I  desire  to  point 
out  that  it  has  other  claims  at  this  time  on  your  interest. 

In  Australia  we  have  only  a  small  population — five  millions  of 
people,  scattered  over  a  territory  as  large  as  the  United  States — 
a  continent  with  the  population  of  New  York.  The  slenderness  of 
our  population  is  one  of  the  penalties  of  our  geographical  isola- 
tion. It  is  largely  ascribable  to  the  existence  of  America.  When 
the  people  of  the  old  world  fared  forth  they  chose  the  nearest  of 
the  new  lands  instead  of  the  most  remote,  and  America  inter- 
cepted the  tide  of  emigration,  which  would  otherwise  have 
flooded  Australasia.  But,  from  our  point  of  view,  the  course  of 
events  which  has  left  us  with  a  small  population  is  not  without 
its  admirable  compensations ;  for  that  population  is  solidly  homo- 
geneous. More  than  97  per  cent,  of  our  people  derive  directly 
from  the  United  Kingdom.  The  residue,  of  non-English-speaking 
ancestry,  are  mainly  from  Northern  European  countries.  In 
Australia  we  have  no  race  problem.  In  that  respect  our  horizon 
is  cloudless. 

Australia's  Manufactures  Developing 

At  the  same  time  Australia  welcomes  the  desirable  immi- 
grant, for  its  available  hands  are  all  too  few  for  the  many  tasks 
which  beset  the  attention  of  the  nation.  At  the  same  time,  too,  we 
think  we  have  done  well  with  the  resources  at  our  disposal.  Most 
of  the  world  knows  Australia  as  a  great  pastoral  country — in 
that  respect  it  is  admittedly  without  a  superior.  Wherever  there  is 
weaving  done  the  wools  of  Australia  are  known.  But  we  are  not 
now  primarily  a  pastoral  people.  Taking  the  year  before  the 
war  broke  out  our  pastoral  and  agricultural  output  was  worth 
$624,804,125,  while  the  output  of  our  factories  was  $808,030,000. 
Our  mineral  production  totalled  $129,050,000.  You  will,  as  manu- 
facturers, be  interested  to  learn  that  the  value  of  the  plant  and 
machinery  in  our  factories  was  $185,595,000.  Much  of  that  plant 

28 


Trade  Relations  with  Australia 


and  machinery  was  supplied  by  this  country.  But  we  import  more 
than  the  machinery  wherewith  to  manufacture  goods.  We  import 
the  manufactured  goods  themselves.  The  per  capita  wealth  of 
Australia  is  very  great,  amounting  to  $2,030.  We  imported  in  the 
last  year  for  which  I  have  the  completed  figures,  goods  to  the 
value  of  $433,75°>°°o ;  that  is,  our  imports  per  annum  would 
build  a  Panama  Canal  every  year,  and  leave  something  over  for 
dredging  out  the  slides  in  the  Culebra  Cut.  In  the  same  year  we 
exported  products  to  the  value  of  $441,250,000. 

The  United  States  Share  of  Australian  Commerce 

What  share  has  the  United  States  in  this  great  commerce? 
That,  I  take  it  is  the  question  in  which  this  gathering  is  most 
keenly  interested.  Well,  the  share  of  the  United  States  is  very 
large ;  much  larger  than  most  people  in  this  country  imagine ;  that 
is  when  they  give  the  matter  any  consideration  at  all,  which,  I 
fear,  is  not  often. 

And  here  I  am  constrained  to  voice  a  little  grievance  which 
we  Australians  cherish  against  you.  I  find  in  your  papers  and 
your  public  men's  utterances,  in  the  activities  of  your  trade  and 
commercial  associations,  in  your  national  projects  for  commercial 
expansion  abroad,  an  infinity  of  allusions  to  almost  every  country 
on  earth  excepting  the  Commonwealth  of  Australia,  and,  I  might 
add,  the  Dominion  of  New  Zealand.  In  some  of  your  official 
publications  we  occasionally  find  Australia  submerged  in  the 
meaningless  title  of  "British  Oceania."  In  the  Department  of 
Commerce  there  may  be  some  meaning  attached  to  this  term,  but 
it  carries  no  meaning  to  the  intelligence  of  Australians.  Australia 
is  a  geographical  and  political  entity  which  is  entitled  to  its  in- 
dividuality in  the  statistics  of  other  countries,  and  I  very  respect- 
fully submit  to  those  concerned  that  the  designation  "British 
Oceania"  should  now  be  abandoned. 

This  year  you  will  supply  Australia  with  about  14  per  cent. 
of  its  total  imports.  The  mysterious  attraction  of  the  Orient 
would  appear  to  have  cast  a  spell  over  the  American  mind,  which 
is  suffering  from  over-orientation  at  the  present  time.  I  have 
no  doubt  that  many  here  will  be  honestly  incredulous  when  I 
make  the  statement  that  for  the  nine  months  of  this  year  ending 
September  30,  you  exported  to  Australia  goods  to  the  value  of 
$40,027,088,  while  you  exported  to  Japan  goods  to  the  value  of 
$32,010,808.  For  those,  nine  months  Australia  was  a  better  cus- 
tomer for  your  articles  of  export  than  was  Japan,  to  the  amount 

29 


First  Session — Monday  Morning 


of  more  than  $8,000,000.  We  bought  from  you  two  and  one-half 
times  the  value  of  China's  purchases.  Australia  and  New  Zealand 
together  took  almost  as  many  dollars'  worth  of  American  goods 
as  those  two  great  Eastern  markets  combined.  Yet,  I  repeat,  for 
one  allusion  to  American  trade  with  Australia,  we  find  one  hun- 
dred allusions  to  "Trade  with  the  Orient." 

Potential  Oriental  Competition 

And,  if  you  will  pardon  a  play  on  words,  such  allusions  are 
more  or  less  in  the  nature  of  illusions.  It  is  far  from  my  inten- 
tion to  lecture  this  gathering,  but  there  are  some  matters  upon 
which  I  hold  direct  views,  and  I  take  it  that  a  company  of 
American  business  men,  such  as  this,  has  a  preference  for  plain 
speaking,  when  that  speaking  is  well-intentioned.  The  Trade  of 
the  Orient  may  well  look  captivating,  but  that  trade  is  not  for  you. 
The  Orient  will  take  care  of  its  own  trade  in  the  near  future. 
The  world  has  had  a  lesson  in  the  recent  industrial  and  commercial 
history  of  Japan,  of  the  range  of  the  oriental  mind,  and  the  skill 
of  the  oriental  hand.  Before  many  years  China  will  be  similarly 
organized,  and  then  the  anxiety  of  the  occidental  civilizations  will 
not  be  about  invading  oriental  markets  with  their  products,  but 
about  devising  means  to  shut  out  the  products  of  cheap,  but 
highly-skilled  and  faultlessly-organized  oriental  labor.  The  posi- 
tion is  simple :  between  the  products  of  the  labor  which  is  paid  in 
cents,  and  the  products  of  the  labor  which  is  paid  in  dollars,  other 
things  being  equal,  there  can  be  no  competition.  Labor-saving 
machinery  will  appear  in  the  East,  and  so  will  American  methods 
of  standardization  in  factory  work.  There  is  one  hope,  which  is  that 
with  all  the  other  things  the  East  will  begin  to  drink  the  Western 
wine  of  high-living,  and  that  in  the  future  the  oriental  workman 
will  demand  as  high  a  wage  as  the  American  workman.  I  am  not 
going  to  say  that  such  a  thing  is  not  to  be,  but  if  it  is  to  come  it 
will  be  at  a  time  so  remote  that  it  will  have  no  bearing  on  the 
problems  of  our  generation. 

Australia  a  Congenial  Market 

Setting  out  as  America  is  on  the  search  for  new  markets, 
you  would  do  well  to  bear  in  mind  that  your  most  valuable,  be- 
cause most  permanent  markets,  are  those  with  which  you  have 
natural  and  economic  affiliations;  at  least,  that  is  how  it  looks  to 
me.  For  instance,  in  discussing  Pan-American  trade  it  is  an- 
nounced that  it  is  necessary  for  your  commercial  men  to  learn 

30 


Trade  Relations  with  Australia 


the  Spanish  tongue.  I  sincerely  hope  it  will  be,  for  that  is  in  it- 
self an  accomplishment.  But  in  trading  with  Australia  you  are 
trading  with  a  people  who  also  speak  the  English  language,  and 
who  to  a  large  extent  have  similar  traditions  with  yourselves  in 
race  and  civilization.  You  are  also  trading  with  a  people  with  the 
same  standard  of  living  as  your  own,  whose  wage-earners  are 
as  well  paid  as  your  own,  and  who  can  consequently  afford  to  buy 
your  goods. 

To  South  America  you  sell  more  in  the  mass  than  to  Aus- 
tralia, but  per  capita  very  much  less.  Quoting  again  from  the 
Monthly  Summary  of  Foreign  Commerce  of  the  United  States  I 
find  that  in  the  nine  months  ending  3Oth  of  September,  you  sold 
to  the  45,000,000  people  of  South  America  exports  to  a  total 
value  of  $103,524,615,  while  you  sent  to  the  6,000,000  in  Aus- 
tralia and  New  Zealand,  in  the  same  period,  exports  valued  at 
$48,352,871.  This  brings  me  to  the  declaration  that  Australasia 
is  not  only  a  good  market  for  your  products,  but  is  actually  one  of 
your  best  markets.  There  is  ample  room  for  expansion  at  the 
present. 

In  1913  your  exports  to  Australia  totalled  $49,185,517.  In 
that  year  the  exports  from  Germany  and  Austria  amounted  to 
$30,880,978.  The  trade  with  those  countries,  as  far  as  Australia 
and  New  Zealand  are  concerned,  is  definitely  at  an  end.  I  do  not 
say  that  you  can  have  all  of  this  trade,  but  a  large  proportion  of 
it  will  come  to  you,  if  you  seize  the  opportunities  now  offered  to 
you.  Indeed,  some  of  it  is  coming  to  you  now,  for  your  exports 
to  Australia  for  this  year  will  exceed  last  year's  figures  by  ap- 
proximately $10,000,000. 

The  things  you  send  to  us  are  mainly:  Manufactures,  prin- 
cipally iron  and  steel,  machinery,  electrical  appliances,  surgical 
instruments,  drugs,  chemicals  and  medicines,  soap,  cameras, 
magic  lanterns  and  phonographs,  vehicles,  motors  and  parts,  rub- 
ber manufactures,  lumber  and  wood  manufactures,  furniture  resin, 
paints  and  varnishes,  glassware,  china  and  earthenware,  lamps 
and  lampware,  leather  and  leather  manufactures,  musical  instru- 
ments, fancy  goods,  clocks,  watches  and  jewelry,  etc.,  paper  and 
stationery,  apparel  and  textiles,  tobacco,  meats,  fish,  oils,  hops, 
glucose,  arms  and  ammunition.  The  list  is  too  long  to  particu- 
larize. 

What  Australia  Has  to  Sell 

I  am  often  asked  what  we  have  to  send  you  in  return  to 
even  up  the  balance  of  trade,  being  a  producer  of  raw  material, 

31 


First  Session — Monday  Morning 


and,  unlike  you,  not  being  to  any  extent  worth  mentioning  ex- 
porters of  manufactured  goods. 

The  figures  published  by  the  Department  of  Commerce 
adequately  answer  this  question.  From  January  to  September, 
I9I3»  y°u  imported  from  Australia  goods  to  the  value  of  $7,677,- 
699.  In  the  same  period  this  year  the  figures  show  the  value  of 
your  Australian  imports  as  $22,631,959,  a  very  remarkable  in- 
crease. These  imports  consist  mainly  of  wool,  hides,  gold,  silver, 
tin  ingots,  zinc  in  concentrates  and  other  forms,  copper,  pearlshell, 
copra,  coconut  oil,  fur  skins,  oleo,  stearin,  and,  in  normal  times, 
we  sent  you,  fresh  meats,  prepared  meats,  butter  and  various 
fruits  and  vegetables.  The  trade  in  the  latter  commodities  is 
rendered  possible  owing  to  the  fact  that  our  seasons  are  the 
reverse  of  yours.  Your  summer  is  our  winter.  Our  season  of 
high  is  your  season  of  low  production,  and  an  opening  is  thus 
made  for  the  interchange  of  fruits,  vegetables,  butter,  etc.  I 
should  say  that  the  imports  from  Australia  for  the  period  men- 
tioned are  swollen  by  the  transmission  of  considerable  sums  of 
gold  to  this  country  in  payment  for  goods  purchased  as  a  result 
of  a  drought  experienced  in  Australia  last  year,  and  through  other 
causes. 

Direct  and  Regular  Steamship  Service  Necessary 

Trade  between  any  two  countries  should  be  balanced,  in  order 
to  ensure  permanency.  The  balance  of  trade  is,  at  present, 
heavily  against  us.  We  think  that  this  is  largely  due  to  absence 
of  regular  means  of  transportation,  and  one  of  our  chief  aims 
is  to  obtain  a  regular  service  between  New  York  and  the  chief 
ports  of  Australia.  While  there  are  many  ships  going  down  to 
Australia  from  New  York,  conveying  American  goods,  these  ships 
do  not  return.  They  are  not  American  ships,  and  have  no  inter- 
est in  returning  to  American  ports  from  Australia.  As  to  the 
American  flag,  it  is  a  very  welcome  but  very  infrequent  visitor 
to  the  harbors  of  Australia.  In  1913  the  United  States  provided 
13  per  cent,  of  the  imports  to  Australia.  In  that  year  61  Ameri- 
can ships  entered  and  cleared  the  Port  of  Sydney,  with  a  tonnage 
of  95,279.  Against  this,  German  ships  to  the  number  of  508  and 
a  tonnage  of  1,540,352  entered  and  cleared  that  port;  yet  Ger- 
many only  provided  7  per  cent,  of  our  imports.  Japan,  which 
only  provided  1.22  per  cent,  of  the  imports  had  94  entrances  and 
clearances,  and  Norway,  providing  a  scant  0.77  of  the  imports, 
had  245  ships  with  a  tonnage  of  286,744.  Of  the  61  American 
entrances  and  clearances,  two  ships,  the  "Ventura"  and  "Sonoma," 

32 


Trade  Relations  with  Australia 


were  responsible  for  24,  as  these  boats  carry  on  the  mail  service 
between  San  Francisco  and  Sydney.  Their  operations  have  been 
so  successful  that  a  third  boat  has  now  been  placed  on  the  run, 
making  a  tri-weekly  service.  The  Pacific  coast  is  now  very  well 
served  for,  in  addition,  the  Union  Steamship  Company  has  three 
boats  running  between  San  Francisco  and  Sydney,  and  there  is 
a  monthly  service  between  Vancouver,  B.  C,  and  Sydney. 

The  existence  of  the  Panama  Canal  opens  the  way  for  a 
direct  service  between  Sydney  and  New  York.  That  service  is 
necessary  if  you  are  to  extend  and  consolidate  your  trade  with 
the  Commonwealth  of  Australia.  I  have  no  wish  to  intrude  on 
your  shipping  controversy,  but  I  may  be  permitted  to  hope  that 
you  will  restore  your  mercantile  flag  to  its  former  prominence. 
In  a  memorable  passage  Edmund  Burke  spoke  of  the  achieve- 
ments of  your  mercantile  marine  when  you  were  a  nation  "in 
the  gristle,  as  it  were,  and  not  yet  hardened  into  the  bone  of 
manhood."  The  implied  prophecy  of  this  passage  is  unfulfilled 
to-day. 

America's  Opportunity 

A  concrete  example  of  the  direct  bearing  of  facilities  of 
transportation  upon  trade  is  provided  in  Commerce  Reports  for 
November  26  (number  277)  in  a  report  of  the  Commercial  Agent 
of  the  Department  of  Commerce  in  San  Francisco,  which  reads  in 
part: 

For  the  first  time  in  more  than  a  decade.  .  .  Oregon  paper  mills 
are  shipping  their  products  to  Australia.  An  order  for  2,000  tons  of 
news  print  has  just  been  filled  for  Sydney,  Melbourne,  and  other  cities  of 
the  Commonwealth  at  the  .  .  .  plant  of  a  large  Oregon  manufacturer, 
and  the  paper  taken  to  Portland  for  shipment.  ...  In  former  years 
the  mills  in  the  Portland  territory  did  a  heavy  business  with  Australia, 
but  on  account  of  the  lack  of  adequate  shipping  facilities,  this  business 
was  lost,  and  the  Australian  people  began  buying  their  paper  in  Europe. 

Lacking  a  permanent  steamship  service  to  carry  your  goods 
to  Australia  and  the  return  trade  from  Australia  to  your  eastern 
ports,  your  hold  on  the  trade  of  Australia  must  remain  precarious. 
And  although  the  feeling  of  Australia  towards  this  country  is 
one  of  unqualified  friendship  you  must  take  this  into  considera- 
tion :  the  end  of  the  war  will  find  several  of  the  great  industrial 
nations  of  Europe  with  enormous  factories  and  plants  on  their 
hands,  organized  for  a  war  purpose,  but  highly  capable  of  serving 
the  purposes  of  peaceful  production.  There  will  be  millions  of 
men  released  from  the  trenches  for  whom  employment  must  be 

33 


First  Session — Monday  Morning 


found.  They  have  been  our  companions  through  the  Valley  of  the 
Shadow,  and  their  claim  on  our  consideration  will  be  great. 
Meanwhile  your  opportunity  is  here.  For  you  the  tide  is  at  the 
flood. 


THE  CHAIRMAN  :  Gentlemen,  our  next  speaker  is  a  delegate 
from  the  Chamber  of  Commerce  of  Bahia,  that  city  in  Brazil 
whose  business  men  are  among  the  most  alert  and  progres- 
sive of  the  great  Brazilian  Republic.  I  have  the  pleasure  of 
introducing  to  you  Mr.  Antonio  Carlos  de  Soveral  of  Bahia. 
(Applause.) 

Address  of  Mr.  Antonio  Carlos  de  Soveral 

Delegate  of  the  Chamber  of  Commerce  of  Bahia,  Brazil 

Mr.  Chairman  and  Gentlemen :  Before  addressing  you  about 
my  country,  and  before  entering  into  the  reasons  for  attending 
this  convention  and  my  ideas  regarding  same,  I  wish  to  ask  your 
indulgence  for  a  foreigner  whose  knowledge  of  your  language  is 
extremely  circumscribed,  and  who,  therefore,  can  only  express 
himself  therein  with  difficulty.  However,  I  shall  be  happy  if  I 
succeed  in  making  myself  understood. 

Representing  as  I  do  the  oldest  chamber  of  commerce  in 
Brazil,  I  feel  the  greatest  interest  in  the  results  which  I  am  cer- 
tain will  accrue  from  the  assembling  of  this  Congress,  especially 
with  regard  to  the  development  of  the  commercial  relations  be- 
tween our  two  countries,  and  particularly  those  of  the  manufac- 
turers of  this  country  with  our  importers. 

As  a  native  Brazilian — merchant  and  manufacturer  there 
during  many  years — I  am  fully  conversant  with  the  extraordinary 
riches  and  inexhaustible  resources  of  my  country — north,  south, 
east  and  west.  I,  therefore,  cherish  the  deepest  hope  of  an 
enduring  and  advantageous  industrial  and  commercial  alliance 
between  our  countries  that  will  divert  the  business  which  hereto- 
fore so  greatly  contributed  to  the  development  and  riches  of 
European  manufacturers,  to  those  of  the  United  States  of  Amer- 
ica. 

Brazil  and  the  other  South  American  republics  have  almost 
entirely  supplied  their  requirements  in  Germany,  Austria,  France, 
England  and  Italy,  and  to  the  lasting  credit  of  my  country's  com- 
merce, in  which  I  take  the  utmost  pride,  I  can  affirm  that  its 
reputation  for  honesty  and  integrity  is  considered  second  to  none 

34 


Brazil — Antonio  Carlos  de  Several 


in  the  world.  When  the  great,  indescribable,  horrible  European 
conflagration  burst  upon  the  world  last  year,  and  when  in  nearly 
all  countries,  merchants,  bankers,  et  als.,  took  advantage  of  the 
moratorium  promulgated  by  the  various  governments,  to  delay 
meeting  their  obligations,  in  Brazil,  only  rarely  and  in  isolated 
cases,  were  renewals  or  extensions  asked  for,  in  spite  of  the  finan- 
cial disorganization  occasioned  by  the  abrupt  suspension  of  credit 
and  the  working  of  credit  machinery. 

Stability  of  Brazilian  Credit 

The  honesty  of  our  commerce  and  people  is  traditional 
wherever  we  are  known,  and  our  history  does  not  disclose,  as  yet, 
a  formidable  crash  that  has  affected  our  credit  abroad.  Our 
industries  are  still  in  their  infancy,  and,  in  many  instances, 
incomplete.  We  are  now  necessarily  dependent  on  those  of 
other  countries,  and  the  constant,  insistent  propaganda  of  the 
European  manufacturers  demonstrates  the  measure  of  credit 
we  inspire.  In  our  country  American  credits  and  capital  will 
always  find  a  welcome  and  a  fertile  field  for  fruitful  application, 
for,  besides  our  commercial  probity,  to  which  I  have  already 
alluded,  almost  everything  is  virgin  and  awaits  development. 
Untold  and  incalculable  latent  riches  await  only  initiative,  energy 
and  capital  to  transform  them  into  tangible,  dynamic  realities. 

In  our  extreme  south  we  have  the  State  of  Rio  Grande  do 
Sul,  whose  climate  is  similar  to  that  of  your  State  of  Maryland, 
and  where  we  have  ideal  soil  for  growing  grain;  nevertheless, 
there  is  but  one  small  flour  mill.  We  also  have  there  herds  of 
cattle  aggregating  five  million  head,  which  show  a  20  per  cent, 
annual  increase,  but  we  have  only  a  few  plants  turning  out 
jerked  beef,  and  not  a  single  cold  storage  establishment.  Besides 
immense  coffee  plantations  in  the  States  of  Sao  Paulo,  Minas  and 
Rio  de  Janeiro,  in  the  States  of  Santa  Catharina  and  Parana, 
there  are  vast  pine  forests  and  unexplored  mines  of  all  descrip- 
tions. In  the  State  of  Bahia,  where  I  reside,  we  have  the  most 
varied  assortment  of  woods,  in  colossal  quantities,  and  neither 
there  nor  in  all  Brazil  is  there  a  firm  that  directs  its  efforts  to 
use  wood  or  lumber  for  the  construction  of  houses.  This,  I 
believe,  is  an  industry  of  great  promise,  for  as  yet  we  have  no 
frame  buildings,  the  construction  being  limited  to  brick,  which 
is  expensive  and  the  process  protracted. 

Sugar  cane  planting  is  conducted  on  a  moderate  scale, 
and  is  most  remunerative.  We  have  eighteen  refineries,  which, 

35 


First  Session — Monday  Morning 


though  very  profitable,  produce  but  fifty  thousand  tons  of  sugar 
annually.  In  the  State  of  Pernambuco  there  are  some  forty-five, 
the  annual  output  of  which  amounts  to  approximately  a  hun- 
dred and  fifty  thousand  tons.  With  a  thorough  reorganization, 
on  up-to-date  lines  and  with  fresh  capital  the  output  of  these  fac- 
tories could  be  doubled  and  the  profits  trebled.  There  is  also  in 
our  State  intensive  cultivation  of  leaf  tobacco,  of  which  half  a 
million  bales  are  annually  exported.  Of  cocoa  the  annual  crop 
has  now  reached  five  hundred  and  fifty  thousand  bags,  and 
bananas  abound.  We  have  unexplored  copper  mines,  and  our 
State  is  the  only  place  in  the  world  where  the  black  diamond  is 
found. 

A  Field  for  Profitable  Investment 

In  all  and  each  of  our  States  American  initiative,  experi- 
ence and  capital  may  find  a  fertile  field  to  explore  profitably. 
I  would  also  say  a  few  words  about  our  bountiful  supply  of  water 
and  waterfalls  all  through  our  country.  In  Alagoas  we  have  the 
Paulo  Affonso  Falls,  the  force  of  which  is  as  great  as  that  of 
Niagara.  These  are  capable  of  producing  sufficient  power  to 
supply  hydro-electric  energy  for  the  industries  of  our  whole 
country.  It  is  these  riches  that  have  excited  the  cupidity  of 
some  foreigners,  whose  current  of  immigration  has  been  in- 
terrupted by  the  European  war,  and  it  is  toward  the  development 
of  these  same  riches  that  I  and  my  compatriots  invite,  with  all 
sincerity,  the  attention  and  study  of  our  North  American  friends. 

I  have  just  visited  twenty-five  States  of  your  immense  and 
wonderful  Union,  and  it  is  with  the  utmost  sincerity  and  enthusi- 
asm that  I  pay  tribute  to  your  colossal  progress,  ingenuity  and 
success  in  your  industrial,  agricultural,  mining  and  commercial 
enterprises.  They  eloquently  attest  the  energy  of  your  captains  of 
industry  and  your  tenacity,  will  power  and  progressive  spirit, 
but  I  was  overjoyed  to  find,  in  comparing  your  soil  with  ours, 
that  our  natural  resources  are  infinitely  superior  to  yours,  and 
if  you,  with  your  proverbial  determination  to  conquer,  would  but 
cast  your  eye  toward  the  southern  hemisphere,  you  will  find  a  vast 
and  lucrative  field  for  your  energy  in  its  commercial,  industrial 
and  financial  expansion. 

Without  presuming  to  criticize  the  methods  of  your  directors 
of  industries,  looking  to  their  development,  I  would  suggest 
the  following  in  a  friendly  spirit,  as  behooves  a  Brazilian  whose 
proverbial  amity  and  interest  in  North  American  development  is 
well  known.  The  protective  tariff  of  the  United  States  of 

36 


Brazil — Antonio  Carlos  de  Soveral 


America,  as  bearing  upon  local  consumption  of  your  own  products, 
and  the  multiple  commissions  resulting  from  the  European  war 
are  diverting  your  attention  from  the  advisability  of  reducing 
cost  of  production  in  order  to  equip  yourselves  to  meet  that  of 
your  European  competitors  after  the  war  has  been  settled,  and 
to  force  the  trade  current — if  not  of  the  whole  world  at  least 
of  South  America — into  channels  leading  to  this  country. 

Before  the  war  the  American  manufacturer  was  little  con- 
cerned in  producing  at  low  cost  in  order  to  undersell  his  Euro- 
pean competitor.  He  never  felt  obliged  to  seek  foreign  markets, 
because  his  own  country,  by  the  amazing  growth  and  development 
in  all  States,  readily  absorbed  his  output  at  remunerative  prices. 
But  once  the  industries  commenced  developing  and  continued 
to  increase  and  grow,  the  distribution  of  the  surplus  became  more 
difficult  and  the  vague  menace  of  a  crisis  was  apprehended.  It 
was  then  the  European  war  broke  out  and  offered  channels  to 
dispose  of  the  surplus  American  production,  which  otherwise 
would  have  become  burdensome.  Subsequently  large  orders  for 
war  supplies  of  all  kinds  taxed  the  maximum  capacity  of  your 
factories,  the  effect  of  which  is  seen  in  the  astounding  activity 
in  various  phases  of  all  your  industrial  and  commercial  organiza- 
tions. 

Considerations  for  the  Future 

But,  after  the  war,  or,  if  it  should  come  to  an  abrupt 
termination?  Then  where  would  the  field  be  found  wherein 
American  industry,  with  its  increased  productive  capacity,  will 
dispose  of  this  surplus?  What  steps  have  been  taken  and  what 
measures  adopted  by  the  American  manufacturer  profitably  to 
compete  in  foreign  fields  with  his  European  confrere?  What  is 
being  done  to  find  a  field  wherein  to  market  sufficient  of  the 
surplus  to  maintain  your  factories  at  the  present  rate  of  pro- 
duction. European  industries  and  their  methods  will  not  disap- 
pear with  the  war.  Immediately  this  barbarous  conflict  terminates 
they  will  reappear  with  redoubled  force  and  energy,  owing  to 
the  imperative  necessity  for  recovering  lost  ground  and  anxiety 
to  recoup  enormous  losses.  Thousands  upon  thousands  will  re- 
turn to  their  former  occupations  and  with  increased  intensity 
battle  to  regain  their  commercial  supremacy.  Therefore,  it  be- 
hooves you  to  grasp  now  this  unique  opportunity,  possibly  never 
to  be  repeated  in  your  history ;  to  secure  a  predominant  position, 
at  least  in  the  commerce  of  the  Latin  American  republics.  And, 

37 


First  Session — Monday  Morning 


unless  you  now  secure  this  field,  to  a  great  extent  the  propitious 
moment  will  have  been  irretrievably  lost. 

To  arrive  at  the  desired  goal  coordination  of  views  and 
harmonious  cooperation  between  manufacturers,  bankers  and  mer- 
chants are  absolutely  essential.  It  is  necessary,  first,  to  reduce  the 
cost  of  manufacturing,  not  only  for  domestic  consumption,  but 
also  for  foreign,  because  if  the  articles  of  prime  necessity  are  not 
cheapened  the  laborer,  mechanic  and  artisan  will  be  unable  to  live 
as  cheaply  as  his  European  confrere,  thus  increasing  the  cost  of 
the  American  article.  Second,  more  liberal  credit  facilities  must 
be  furnished,  especially  in  countries  where  industrial  development 
is  in  its  infancy  and  resources  limited,  making  them  de- 
pendent upon  foreign  countries.  Third,  direct  shipping  com- 
munication with  consuming  markets  must  be  established,  creat- 
ing an  American  marine  capable  of  transporting  merchandise  at 
reduced  rates  of  freight.  Fourth,  to  establish  direct  relations, 
where  possible,  with  the  South  American  consumer,  avoiding  in- 
termediaries who  are  not  always  advantageous.  These,  on  general 
lines,  are  the  ideas  which  I  submit  with  profound  deference,  for 
your  enlightened  consideration.  Their  adoption,  I  venture  to 
say,  will  redound  to  the  ultimate  benefit  and  glory  not  only  of 
my  beloved  country  but  of  that  whose  emblem  of  the  Stars  and 
Stripes  has  so  often  inspired  my  countrymen  with  sympathetic 
admiration  and  enthusiasm  to  emulate  its  unexampled  progress. 


THE  CHAIRMAN  :  Gentlemen,  Colombia  is  represented  at  this 
Conference  among  others  by  Mr.  Francisco  Escobar,  delegate  of 
the  Chamber  of  Commerce  of  Bogota,  whom  I  now  have  the 
pleasure  of  introducing  to  you.  Mr.  Escobar.  (Applause.) 

Address  of  Mr.  Francisco  Escobar 

MR.  ESCOBAR:  Mr.  Chairman  and  Gentlemen:  It  is  a  real 
pleasure  to  come  into  such  distinguished  company,  although  I 
notice  that  the  company  has  been  pretty  well  scattered  by  the  time 
it  has  become  my  turn  to  address  you ;  so  I  shall  spare  you,  and 
instead  of  reading  my  speech,  which  I  notice  is  in  print,  and  which 
I  suppose  you  will  be  able  to  read  just  as  well  as  I  can,  and  per- 
haps without  glasses,  I  shall  just  make  a  few  passing  remarks 
upon  the  most  eloquent  addresses  of  those  gentlemen  who  have 
preceded  me,  in  line  with  a  few  of  the  remarks  which  have  recently 
been  made  here,  that  these  are  the  times  of  opportunity  for  the 

38 


Colombia — Francisco  Escobar 


United   States,   for  those  that  have  preceded  me  have  said  as 
much ;  so  that  the  competition,  I  notice,  is  very  strong. 

•  I  wan'ed  to  preach  here  the  convenience  of  American  capital 
going  to  Colombia  and  other  Latin  American  countries  and  of 
investors  and  American  manufacturers  paying  more  attention  to 
those  lands  which  I  call  lands  of  the  future,  rather  than  to  the 
old  countries  where  political  complications  and  disasters  of  all 
kinds  are  happening  now  and  shall  continue  to  happen  while  hu- 
manity exists. 

Now,  gentlemen,  I  would  be  ashamed  to  quote  figures  when 
it  comes  to  Colombia.  That  is  why  I  say  that  we  are  the  land 
of  tomorrow^  not  of  that  "mafiana"  which  you  speak  of  derisively 
for  idle  people,  but  the  maiiana  of  those  that  live  in  the  future — 
the  only  real  time  in  a  man's  existence,  because  the  past  is  only 
valuable  for  what  it  teaches  us;  the  present  does  not  exist;  and 
the  future,  the  future  is  the  only  real  time  that  counts  in  a  man's 
life,  because  it  embodies  hope,  the  vitalizing  spirit  of  the  human 
breast.  So  Colombia  and  all  the  Latin  American  countries  with 
Colombia  are  lands  of  the  future.  They  are  awaiting  the  ar- 
rival of  the  true  missionaries  of  commerce,  the  arrival  of  foreign 
commerce  and  immigration  to  wake  up  to  the  modern  life  and  the 
life  of  progress  which  we  all  desire,  and  which  we  all  need. 

It  would  be  needless  for  me  to  speak  of  our  Colombian  re- 
sources and  perhaps  more  so  to  say  what  Colombia  is.  The 
honorable  gentleman  from  Australia  said  that  the  whole  continent 
of  Australia  has  only  five  million  inhabitants;  and  that  coin- 
cidence strikes  me,  because  that  is  about  the  figure  that  Colombia 
has  nowadays.  But  Colombia  will  be  increasing  at  the  rate  of 
at  least  two  per  cent,  per  year,  so  that  in  the  course  of  a  decade 
Colombia  may  have  six  million  inhabitants. 

The  trade  of  Colombia  at  the  present  time  is  very  small, 
but  her  foreign  commerce  is  mostly  done  with  the  United  States, 
and  that  in  spite  of  the  fact  that  Colombia  has  great  reasons 
of  resentment  against  the  United  States  for  the  fateful  incident 
of  Panama,  which  shall  remain  as  a  blot  on  the  United  States 
flag  while  time  lasts  and  until  proper  amends  are  made. 

Gentlemen,  most  of  you  are  interested  in  the  expansion  of 
trade.  So  are  we.  We  want  to  make  those  relations  between 
the  United  States  and  Colombia  still  closer  and  increase  them  as 
much  as  we  can. 

As  I  say,  we  need  your  capital  and  we  need  your  coopera- 
tion. 

39 


First  Session — Monday  Morning 


Somebody  has  said  here  that  trade  follows  the  flag;  but  let 
that  flag  be  clean  and  spotless,  without  any  blots  on  it.  It  is  up 
to  you  to  wipe  out  that  blot  that  somebody  put  on  your  flag, 
through  that  mi  fortunate  canal  incident. 

Colombian  Commerce 

If  you  v  lyze  the  figures  of  Colombian  trade  you  will  find 
them  very  st&Jl,  but  they  are  very  significant  when  you  read 
them  correctly  and  find  out  that  Colombia  sends  to  the  United 
States  more  than  55  per  cent,  of  her  exports  and  takes  from  the 
United  States  from  28  to  30  per  cent,  of  her  imports.  That  is,  she 
buys  more  from  the  United  States  than  from  any  other  country 
taken  separately.  Of  course,  from  Europe  she  buys  most  of  it, 
but  from  the  United  States  as  a  nation  she  buys  more  than  from 
anybody  else.  So  that  you  have  there  the  line  of  least  resistance, 
and  the  balance  of  commerce  is  in  favor  of  Colombia.  That 
proportion  may  be  of  three  to  one.  The  liquidation  at  present 
is  done  through  bills  of  exchange  that  go  to  Europe  to  pay  for 
merchandise.  You  could  liquidate  directly  your  manufactures 
in  the  United  States — the  product  of  your  manufactures  in  ex- 
change for  our  raw  products.  That  is  what  I  call  the  line  of 
least  resistance. 

Some  eloquent  speakers  representing  Europe  have  quoted 
so  many  millions  that  it  made  my  head  swim,  but  you  are  per- 
haps living  in  the  present  and  thinking  that  those  millions  of 
dollars  that  represent  your  exports  and  your  trade  with  Europe 
at  the  present  time  and  with  other  countries  is  going  to  last;  but 
I  am  afraid  not.  The  currents  of  commerce  will  tend  to  take 
their  old  courses  as  soon  as  this  terrible  crisis  of  the  European 
war  is  ended ;  and  it  is  to  your  interest  to  look  up  the  new  lines, 
the  new  continent,  and  to  look  to  new  people — I  say  new  to 
you,  because  really  you  know  very  little  about  us.  Therefore, 
I  say  again  that  the  future  is  the  only  period  of  time  that  counts 
in  a  man's  life  and  in  a  nation's  life,  and  therefore  I  hope  that 
the  American  manufacturer,  the  American  investor,  the  captains 
of  industry  of  the  United  States  will  be  instrumental  in  the  de- 
velopment of  Colombia  and  in  thus  reaping  the  benefit  to  them- 
selves which  is  so  devoutly  to  be  wished,  and  which  I  think  is 
the  main  object  of  this  gathering. 

I  thank  you.     (Applause.) 

(The  following  paper  was  also  presented  to  the  Conference 
by  Mr.  Escobar)  : 

40 


Colombia — Francisco  Escobar 


Colombia 

By  FRANCISCO  ESCOBAR, 

Delegate  of  the  Chamber  of  Commerce  of  Bogota 

As  I  understand  it,  the  main  object  of  this  gathering  is  to 
exchange  views  regarding  international  trade,  but  particularly  to 
discuss  ways  and  means  of  trade  expansion  and  commercial  inter- 
course with  Latin  America.  Much  has  been  said  and  written  on 
the  latter  topics  since  the  European  war  broke  out;  for  then,  as 
never  before,  the  gates  of  opportunity  were  thrown  wide  open 
to  the  United  States. 

A  wave  of  enthusiasm  swept  over  this  country ;  enthusiasm 
which  was,  unfortunately,  short-lived.  Either  because  this  coun- 
try was  not  in  a  position  to  finance  Latin  America  during  those 
critical  times,  or  because  you  were  not  otherwise  prepared  for 
the  task,  the  fact  remains  that  the  opportunity  has  been  slipping 
past;  and  you  know  that  Opportunity  knocks  but  once  at  every 
door  and  then  goes  its  way  to  return  no  more. 

Outside  of  some  sporadic  attempts  by  the  government  and 
people  of  this  country  to  win  trade  in  Latin  America,  little  has 
been  done  in  a  systematic  way  that  may  be  considered  of  perma- 
nent value. 

In  the  hurry-scurry  way  in  which  we  live  nowadays  many 
people  have  come  to  consider  the  present  as  the  real  time  in  which 
to  do  and  for  which  to  endeavor.  Such  people  only  exist  and  to 
them  my  remarks  will  not  appeal.  I  want  to  address  myself  to 
those  who  may  believe  with  me  that  the  present  does  not  exist, 
and  that  the  only  periods  that  count  for  anything  in  a  man's  life 
are  the  past  and  the  future:  the  past  for  the  valuable  lessons 
that  it  teaches ;  the  future  for  the  wise  application  of  those  lessons 
and  because  it  embodies  hope,  the  vitalizing  spirit  in  the  human 
breast. 

Most  of  the  Latin-American  countries  are  lands  of  the  fu- 
ture, and  Colombia  is  more  so  than  any  other. 

Her  present  population  is  a  little  above  5,000,000.  Figuring 
on  an  average  increase  of  2  per  cent,  a  year,  she  will  have  added 
to  her  population  in  the  next  ten  years  1,000,000,  making  the 
total  6,000,000.  Her  commercial  ratio  of  foreign  trade  is  at  the 
present  time  only  $12  per  capita,  so  that  in  a  decade  the  value 
of  her  foreign  trade  should  amount  to  $72,000,000,  on  the  sup- 
position that  her  commercial  ratio,  which  is  to-day  one  of  the 
lowest  in  South  America,  will  only  remain  stationary. 


First  Session — Monday  Morning 


As  the  percentage  of  imports  is  now  45  per  cent,  of  the 
total  foreign  trade,  then  at  the  end  of  the  ten  years  her  imports 
should  amount  to  the  sum  of  $35,100,000,  and  $10,000,000 
thereof  would  correspond  to  the  United  States,  on  the  present 
percentage  of  28  per  cent,  which  is  the  ratio  that  her  imports 
from  this  country  bear  to  the  total. 

The  following  figures  may  be  found  useful : 

Total  export  trade  in  1913 $34,315,000 

Total  import  trade  in  1913 28,535,800 

Value  of  exports  to  the  United  States 18,861,800 

Value  of  imports  from  the  United  States 7,629,000 

The  corresponding  figures  for  1914  diminished  somewhat 
due  to  the  general  crisis  produced  by  the  World  War. 

These  figures  are  illuminating  because  they  show  that  in  the 
measure  of  her  capacity,  Colombia  is  one  of  your  important 
customers,  notwithstanding  the  fact  that  Colombia  has  grave  rea- 
sons for  resentment  on  account  of  the  unfortunate  incident  of 
the  canal  zone,  which  will  remain  as  a  blot  on  the  escutcheon  of 
the  United  States  until  proper  amends  are  made. 

It  is  worth  noting  that  the  balance  of  trade  between  the  two 
countries  is  largely  in  favor  of  Colombia,  a  balance  which  might 
as  well  be  liquidated  in  manufactured  goods  and  products  re- 
turned to  her,  instead  of  through  bills  of  exchange  sent  to  Europe 
in  payment  of  merchandise. 

The  above-quoted  figures  may  seem  small — too  small — to 
some  people;  but  you  must  bear  in  mind  that  Colombia  needs 
developing,  and  I  can  assure  you  that  those  who  may  contribute 
to  her  future  development  will  reap  the  benefit. 

But,  what  is  Colombia  ?  you  may  ask. 

I  shall  tell  you  in  a  few  words : 

A  Rich  Field  Awaiting  Development 

A  country  of  over  five  million  souls  scattered  over  the  im- 
mense area  of  368,000  square  miles.  In  that  vast  region  where 
all  the  products  of  agriculture  could  be  raised  and  which  con- 
tains fertile  plains,  smiling  valleys  and  forests  unexplored,  enough 
could  be  produced  to  sustain  a  population  of  one  hundred  millions. 

A  country  where  645  miles  of  rails  in  disjointed  links  pro- 
claim the  crying  need  of  railways.  There  the  Government  offers 
subsidies  and  guarantee  of  capital  and  interest  to  the  foreign  in- 
vestor; and  wise  laws  and  firmly  established  peace  give  security 
to  the  capitalist. 

42 


Colombia — Francisco  Escobar 


A  country  whose  main  line  of  communication — the  Magdalena 
River — is  plugged  up  at  the  mouth,  as  it  were,  by  shifting  sand 
bars;  and  that  despite  the  fact  that  it  would  cost  only  some 
$2,000,000  to  clear  those  bars  in  order  to  allow  sea-going  steamers 
to  enter  the  river  and  land  their  cargoes  at  Barranquilla,  thus 
saving  enormous  sums  of  money  in  the  cost  of  handling,  to  say 
nothing  of  the  saving  in  time  and  in  damages  for  breakage  caused 
by  the  breaking  of  bulk  necessary  at  the  present  time. 

A  country  with  thousands  of  miles  of  coast  line  on  two  oceans, 
having  only  one  real  harbor — Cartagena — the  other  ports,  either 
on  the  Pacific  or  the  Atlantic  side,  being  open  roadsteads  or 
totally  unimproved  and  in  need  of  sanitation.  And  the  port  im- 
provement is  another  crying  need  of  the  country  in  which 
foreign  capital  would  find  profitable  investment. 

A  country  whose  total  banking  capital  is  less  than  $i  per 
capita  and  the  circulating  medium  only  $5  per  inhabitant. 

A  country  whose  foreign  debt  it  only  $3.60  per  capita,  when 
it  could  easily  support  ten  times  as  much. 

A  country  where  immigration  is  practically  unknown. 

Now,  gentlemen,  if  such  a  country  does  not  offer  great  oppor- 
tunities to  the  investor  from  abroad,  no  country  on  the  face  of 
the  earth  does. 

If  such  a  country  is  not  an  alluring  field  for  capital,  energy 
and  enterprise,  no  other  country  is. 

If  such  a  country  is  not  worth  seeking  and  cultivating  com- 
mercially, there  is  no  country  worth  seeking  and  cultivating. 

I  hope  that  these  few  remarks  may  have  given  you  a  clear 
conception  of  what  Colombia  is  and  does  under  the  shackles  of 
adverse  circumstances,  and  also  of  what  she  will  be  able  to  do  in 
the  near  future  when  the  magic  wand  of  foreign  capital  awakens 
her  to  the  realization  of  modern  life  and  progress. 

And  finally,  I  hope  that  the  financiers  and  captains  of  indus- 
try of  the  United  States  may  realize  the  potentiality  of  Colombia 
and  thus  be  instrumental  in  the  awakening  so  devoutly  to  be 
wished. 


THE  CHAIRMAN  :  Gentlemen,  this  closes  our  forenoon  session, 
and  we  will  now  take  a  recess  until  two  o'clock. 

(Whereupon,  at  12:40  P.M.,  a  recess  was  taken  until  2:00 
o'clock  P.M.) 


Second  Session — Monday  Afternoon 


SECOND  SESSION 

Monday  Afternoon,  December  6,  1915 

The  Conference  was  called  to  order  at  2  o'clock,  p.m., 
Colonel  George  Pope  in  the  chair. 

THE  CHAIRMAN  :  The  first  speaker  on  the  program  this  after- 
noon is  Mr.  Trygve  Wettre,  delegate  of  the  Chamber  of  Com- 
merce of  Christiania.  I  have  the  pleasure,  gentlemen,  of  intro- 
ducing to  you  Mr.  Wettre. 

Address  of  Mr.  Trygve  Wettre 

Delegate  of  the  Chamber  of  Commerce  of  Christiania 

Mr.  President,  Members  of  the  Conference  and  Honorable 
Guests :  On  behalf  of  the  Chamber  of  Commerce  of  Christiania, 
Norway,  which  I  have  the  honor  to  represent  at  this  conference, 
I  beg  to  express  their  thanks  for  the  invitation  you  sent  asking 
their  attendance  at  your  meetings  and  I  can  assure  you  that  the 
Chamber  of  Commerce  of  Christiania,  as  well  as  business  people 
in  general  in  Norway,  take  a  very  large  interest  in  all  steps  taken 
or  to  be  taken  that  serve  the  development  of  trade  with  our 
country. 

The  Christiania  Chamber  of  Commerce  is  therefore  highly 
pleased  that  it  was  possible  to  arrange  for  a  special  representa- 
tion through  me  as  one  of  their  members  at  this  Conference,  the 
results  of  which  are  watched  with  great  interest  on  our  side. 
We  consider  the  opening  of  new  ways  and  means  for  facilitating 
international  transactions  to  be  of  the  very  highest  importance, 
especially  during  the  present  serious  time,  and  the  Chamber  of 
Commerce  of  Christiania  is  anxious  to  assist  by  all  means  any 
efforts  serving  this  purpose.  It  may  interest  you  to  learn  that 
I  am  asked  to  give  a  full  report  of  this  conference  and  its  re- 
sults at  a  special  meeting  to  be  held  in  Christiania  as  soon  as 
I  will  be  back,  some  time  early  next  year. 

I,  therefore,  beg  to  thank  you  for  having  given  me  an  op- 
portunity to  express  to  this  distinguished  audience  consisting 
of  the  most  prominent  banking  men,  business  men,  manufac- 
turers, etc.,  of  the  United  States,  as  well  as  the  other  repre- 
sentatives present,  how  closely  we  follow  your  work  and  how 
interested  we  are  in  supporting  the  same  to  the  benefit  of  facil- 
itating the  business  transactions  between  the  United  States  and 
Norway. 

44 


Norway — Trygve  Wettre 


Norway  has  always  been  a  country  that  takes  great  interest 
in  the  problems  pertaining  to  progress  of  all  kinds — social,  mer- 
cantile, etc. — and  I  daresay  that  we  are  indebted  to  the  United 
States  for  a  great  many  improvements  of  various  kinds. 

Norwegians  in  the  United  States 

We  feel  in  Norway  in  many  ways  closely  connected  with 
your  country,  Norwegians  having  at  a  very  early  time  com- 
menced to  settle  in  the  United  States  and  a  great  many  of  my 
countrymen  now  live  in  this  country,  especially  in  the  north- 
western part.  The  Norwegian  immigrants  in  the  States  are  in 
numbers  not  far  from  one-third  of  the  whole  population  of 
Norway. 

I  do  not  think  you  expect  me  to  give  you  on  this  special 
occasion  any  details  or  statistics  as  to  the  trade  of  Norway,  but 
it  may  interest  you  to  learn  that  the  Chamber  of  Commerce  of 
Christiania  that  I  am  representing  here  is  an  official  institution 
founded  by  the  government  and  the  exchange  at  Christiania. 
The  members  of  the  Chamber  are  appointed  by  the  various  groups 
of  associations  of  manufacturers,  bankers,  underwriters,  import- 
ers, exporters,  merchants,  etc.,  each  such  association  appointing 
one  representative  who  has  to  be  approved  by  the  Secretary  of 
Commerce.  The  number  of  members  of  the  Chamber  of  Com- 
merce is  limited  to  fifty. 

Character  of  Norway's  Commerce 

As  to  the  trade  of  our  country,  I  beg  to  say  that  we  are 
largely  depending  on  the  importation  of  grain,  flour  and  a  great 
many  other  foodstuffs,  and  besides  this  we  also  import  a  great 
deal  of  manufactured  goods,  machinery  for  agriculture  and  paper 
manufacturing  on  a  large  scale,  together  with  raw  materials. 
The  exports  of  our  country  consist  mostly  of  fishery  products, 
articles  resulting  from  the  wood  industry,  chemical  products,  etc. 
Owing  to  the  enormous  amount  of  water  power  available  in  our 
country,  we  expect  a  considerable  development  of  our  industry, 
especially  of  that  kind  which  is  depending  upon  the  existence 
of  large  power  cheaply  available.  No  nation  being  so  self-sus- 
taining that  it  does  not  need  the  importation  of  foreign  goods  or 
materials,  we  in  our  country  look  out  for  the  development  also 
of  our  own  trade  as  far  as  exports  to  the  United  States  are 
concerned. 

45 


Second  Session — Monday  Afternoon 


Value  of  Small  Nations  as  Customers 

The  present  situation  has  no  doubt  shown  to  exporters  and 
manufacturers  of  this  country  that  the  smaller  nations,  to  one 
of  which  I  belong,  and  which  have  found  their  way  to  come  into 
more  direct  and  close  communication  with  the  United  States 
than  formerly  has  been  the  case,  are  customers  that  may  be 
worth  while  and  I  profit  by  this  opportunity  to  mention  the  ad- 
visability of  having  direct  representation  in  Norway  instead  of 
having  a  sole  representative  or  agent  for  the  entire  continent  of 
Europe.  The  buyers  in  Norway  have  in  many  cases  found  it  to 
be  to  their  disadvantage  to  place  their  orders  through  a  repre- 
sentative in  a  foreign  country  of  Europe ;  not  alone  for  the  rea- 
son that  the  expense  is  higher,  but  also  because  they  feel  they 
are  not  getting  the  advantage  of  buying  direct  from  the  manu- 
facturer. You  are  no  doubt  aware  that  a  direct  steamship  con- 
nection is  established  between  New  York  and  Norwegian  ports, 
and  this  line  has  proved  to  be  a  great  success,  not  alone  for  the 
line  itself,  but  also  because  we  are  able  to  get  hold  of  American 
goods  promptly  without  any  unnecessary  delay.  Today  we  are 
able  to  ship  from  practically  any  point  on  the  coast  of  America 
via  our  own  lines  direct  to  Norway. 

Appreciation  of  the  Norwegian  Krone 

It  has  been  a  surprise  to  many  of  the  bankers  in  New  York 
that  the  value  of  the  Norwegian  krone  has  increased  consider- 
ably in  the  last  month.  This  is,  however,  not  so  surprising  when 
you  realize  the  facts  in  Norway  today.  The  shipping  industry, 
of  which  we  are  a  large  factor,  is  today  bringing  in  large  profits 
to  the  country  and  shipment  from  this  country  is  largely 
done  on  Norwegian  ships  today.  The  collection  of  this  freight 
is  made  mostly  in  New  York  and  our  credit  balance  will  show 
very  favorable  toward  Norway.  When  you  bear  in  mind  that 
Norway  has  a  population  of  only  two  and  one-half  million  people 
and  we  are  the  third  or  fourth  largest  ship  owners  in  the  world 
as  to  tonnage,  you  can  readily  see  how  important  this  is  for  our 
country. 

The  opening  of  new  and  extended  transactions  between  the 
United  States  and  Norway  necessitates  additional  banking  facil- 
ities, and  it  has  been  a  great  pleasure  for  me,  during  my  visit 
here,  to  state  that  the  financial  institutions  are  already  looking 
into  this  and  trying  by  all  means  to  overcome  the  difficulties. 

In  conclusion  I  have  the  honor  to  express  to  you  the  com- 

46 


Transportation  and  Foreign  Trade 


pliments  of  the  Chamber  of  Commerce  of  Christiania  with  the 
best  wishes  for  the  good  result  of  this  conference. 

THE  CHAIRMAN  :  Gentlemen,  I  wish  to  announce  a  slight 
change  in  the  program  for  the  afternoon,  and  that  is  as  to  the 
discussions  of  the  several  papers.  We  will  postpone  the  dis- 
cussions until  after  the  reading  of  the  fourth  paper,  as  all  these 
papers  refer  to  transportation,  instead  of  having  the  discussion 
after  each  paper  as  it  is  read. 

It  hardly  seems  necessary  for  me  to  introduce  the  next 
speaker  to  any  of  the  Americans  in  this  audience,  and  perhaps 
not  to  those  who  come  from  other  lands,  for  his  reputation  is 
not  only  national  but  international.  He  was  selected  by  our 
Federal  Government  to  make  a  report  on  the  Panama  Canal  and 
its  tolls,  and  his  report,  comprised  in  a  large  volume,  has  become 
a  work  of  international  importance.  I  have  the  pleasure  of  intro- 
ducing to  you  Professor  Emory  R.  Johnson,  of  the  Wharton 
School  of  Finance  and  Commerce  of  the  University  of  Penn- 
sylvania. 

Address  of  Professor  Emory  R.  Johnson 

PROFESSOR  JOHNSON:  Gentlemen  of  the  International  Trade 
Conference:  The  thought  that  I  wish  to  express  this  afternoon 
is,  first  of  all,  that  success  in  international  commerce  depends 
upon  organizing  the  productive  activities  of  the  country  in  the 
most  economical  and  efficient  manner;  second,  that  the  country 
must  be  supplied  with  adequate  railroad  facilities  that  reach  all 
settled  and  industrially  developed  parts  of  the  country;  third, 
that  at  the  seaboard  there  must  be  ports  able  to  handle  the 
traffic  in  such  a  way  as  to  devote  to  different  parts  of  the 
port  the  work  of  handling  particular  traffic ;  that  is,  specialization 
in  the  work  of  the  ports;  and,  fourth,  that  there  must  be  an 
adequate  marine  under  the  American  flag  to  handle  our  foreign 
commerce. 

Those  thoughts  hardly  need  half  an  hour  to  present,  and 
yet  they  are  thoughts  that  represent  problems,  which,  unfortun- 
ately, are  far  from  being  satisfactorily  solved  in  this  country 
up  to  the  present  time. 

Production  is  the  beginning  of  commerce.  The  system  of 
inland  transportation,  mainly  by  rail  and  to  some  extent  by 
systematically  developed  waterways,  that  enables  a  territorial 
division  of  the  productive  activity  to  be  worked  out,  so  that 
each  section  of  the  country  may  engage  for  foreign  trade  in  those 

47 


Second  Session — Monday  Afternoon 


activities  for  which  it  is  adapted ;  that,  I  say,  is  the  first  requisite 
of  real  success  in  international  trade. 

It  is  as  essential  to  international  trade  that  the  railway  fa- 
cilities be  adequate,  and  that  those  who  operate  them  be  able 
to  secure  profits  that  will  enable  them  to  command  capital,  as 
it  is  to  have  a  merchant  marine. 

I  have  said  in  the  paper  I  have  prepared  that  carriers 
must  be  in  a  position  to  secure  the  capital  required  to  maintain 
a  high  standard  of  service  in  order  to  obtain  the  funds  needed 
to  make  such  annual  additions  to  track  mileage  and  terminals 
and  to  rolling  stock  as  will  insure  the  development  of  railways 
commensurate  with  the  growth  of  the  country  in  population, 
industry  and  commerce.  This  is  the  first  transportation  problem 
connected  with  foreign  trade. 

However  efficient  the  railways  may  be,  they  end  at  the 
seaboard;  and,  at  the  seaboard,  the  exports  must  be  transferred 
to  ships,  and  the  imports  must  be  taken  from  ships  and  put 
aboard  the  railroads.  There  must  be  well  developed  terminals 
and  terminal  facilities  at  the  seaboard. 

In  various  trips  that  I  have  made  to  Europe  I  have  been 
impressed  with  the  fact  that  abroad,  in  Liverpool,  in  Rotterdam, 
in  Antwerp,  in  Hamburg  and  other  cities  that  occur  to  all  of 
us,  there  has  been  a  more  systematic  development  of  the  several 
facilities  that  center  at  a  seaboard  port  than  there  has  been  in 
this  country. 

Take  Hamburg,  for  instance:  traffic  which  comes  to  Ham- 
burg down  the  river,  by  water,  has  its  special  part  of  the  port 
set  aside  for  its  use.  The  middle-sized  ocean  steamers  that  come 
up  the  river  have  their  large  docks,  and  the  docks  are  specialized 
with  reference  to  different  kinds  of  traffic;  while  the  largest 
traffic  steamers  of  all  are  handled  at  Cuxhaven,  some  distance 
from  Hamburg,  but  really  at  a  place  which  is  a  part  of  the  great 
port  of  Hamburg. 

(The  full  text  of  Professor  Johnson's  paper  follows)  : 

Transportation  and  Foreign  Trade 

By  EMORY  R.  JOHNSON,  PH.D.,  Sc.D. 

Professor  of  Transportation  and  Commerce,  University  of  Pennsylvania. 

International  trade,  as  regards  most  commodities,  is  highly 
competitive.  The  successful  development  of  foreign  commerce 
is  dependent  upon  economy  and  efficiency  of  domestic  produc- 
tion, and  upon  the  working  out  of  a  territorial  division  of  labor 

48 


Transportation  and  Foreign  Trade 


that  will  enable  each  section  of  the  country  to  engage  in  those 
productive  activities  for  which  it  is  best  equipped  as  to  climate, 
resources  and  labor  supply.  Success  in  production,  which  is 
the  necessary  antecedent  of  foreign  trade,  is  the  result  of  the 
best  use  of  the  various  resources  of  a  country,  of  the  application 
of  labor  and  capital  where  they  will  produce  the  largest  results, 
of  the  distribution  and  organization  of  industry  that  will  yield 
the  largest  annual  output  at  the  minimum  cost. 

Physical  Essentials  for  Successful  Export  Trade 

A  country  of  continental  proportion  can  engage  largely  and 
profitably  in  foreign  trade  only  if  equipped  with  adequate  and 
economical  means  of  transportation  both  by  land  and  by  sea.  The 
country  well  supplied  with  railroads  and  inland  waterways  that 
are  coordinated  and  efficiently  managed,  and  that  serve  all  sec- 
tions capable  of  settlement  and  development,  is  able  to  engage 
successfully  in  production  for  export  and  to  make  profitable 
use  of  large  quantities  of  imports  both  of  raw  materials  and  of 
more  or  less  completely  fabricated  manufactures.  The  entire 
country,  with  all  its  resources  and  energies,  may  engage  in 
industrial  competition  with  other  countries  and  sections  of  the 
world. 

From  the  standpoint  of  foreign  trade  as  well  as  from  the 
viewpoint  of  domestic  industry,  it  is  essential  that  railway  facili- 
ties be  adequate.  Carriers  must  be  in  a  position  to  secure  the 
capital  required  to  maintain  a  high  standard  of  service  in  order 
to  obtain  the  funds  needed  to  make  such  annual  additions  to  track 
mileage,  to  terminals,  and  to  rolling  stock  as  will  insure  a  de- 
velopment of  railways  commensurate  with  the  growth  of  the 
country  in  population,  industry,  and  commerce.  This  is  the 
first  transportation  problem  connected  with  foreign  trade. 

Coordination  of  Railroads  and  Ocean  Carriers 

Rail  transportation  ends  at  the  seaboard,  but  foreign  trade 
in  exports  must  be  served  by  facilities  and  agencies  that  pro- 
vide through  transportation  from  interior  points  of  production 
to  markets  in  foreign  countries  beyond  the  sea,  while  the  im- 
port trade  requires  through  shipment  from  foreign  centers  of 
production  to  inland  destinations  within  the  United  States.  To 
accomplish  this  there  must  be  close  physical  and  commercial  co- 
ordination, though  not  necessarily  financial  combination,  of  rail- 
roads and  ocean  carriers  at  the  terminals.  The  railroads  in  the 

49 


Second  Session — Monday  Afternoon 


development  of  their  seaboard  terminals  at  present  are  seeking 
to  bring  this  about.  In  the  past,  however,  the  tendency  of  the 
railroads  has  been,  with  notable  exceptions,  to  develop  their  ter- 
minals at  the  large  seaboard  cities  mainly  with  reference  to 
serving  domestic  industries  and  to  meeting  the  needs  of  domestic 
trade  without  cooperating  with  the  ocean  carrier  in  the  develop- 
ment of  port  facilities.  Even  at  some  of  the  large  ports,  the 
railroads  have,  in  the  past,  regarded  foreign  trade  as  of  minor 
consequence  in  comparison  with  domestic  traffic.  With  the 
rapid  growth  of  foreign  commerce  during  recent  years  it  has 
become  evident  that  the  railroads,  without  in  any  way  neglecting 
the  extension  of  facilities  for  the  traffic  of  domestic  industries, 
need  to  make  systematic  provision  for  the  economic  handling  of 
export  and  import  business. 

Responsibility  of  Government  and  State  Officials  and 
Commercial  Bodies 

State  and  municipal  authorities  as  well  as  the  rail  and  water 
carriers  have  a  duty  to  perform.  In  the  administration,  im- 
provement and  organization  of  port  facilities,  the  States  and  the 
cities  should  seek  to  bring  about  the  construction  of  piers, 
wharves,  and  storage  facilities  specialized  with  reference  to  the 
needs  of  different  kinds  of  traffic,  and  to  secure  the  physical  co- 
ordination, at  each  port,  of  these  facilities  with  the  railroads  in 
such  a  way  as  to  unify  all  transportation  facilities  and  to  make 
each  port  efficient  and  economical  in  the  handling  of  foreign 
trade. 

Chambers  of  commerce  and  other  business  organizations  can 
be  of  great  assistance  in  the  development  of  foreign  trade  by 
cooperating  with  the  railroads  and  port  authorities  in  bringing 
about  the  systematic  and  coordinated  development  of  ter- 
minal facilities.  It  is  necessary  that  business  organizations 
work  together,  subordinating  petty  jealousies  in  their  labors  for 
the  common  good  of  the  public  as  a  whole.  Hamburg,  Rotter- 
dam, Antwerp,  and  other  foreign  ports  that  might  be  men- 
tioned have  made  rapid  progress  in  foreign  trade,  partly  because 
public  and  private  authorities  have  efficiently  cooperated  in  the 
development  and  coordination  of  port  facilities.  The  United 
States  has  much  to  learn  from  the  practical  experiences  of  for- 
eign competitors.  In  this  country  the  relation  of  the  public  au- 
thority to  the  railroads  often  ends  where  it  should  very  properly 
begin,  with  efforts  to  control.  Regulation  is  desirable,  but  it  is 

50 


Transportation  and  Foreign  Trade 


only  a  first  step  towards  a  combination  of  the  efforts  of  the  gov- 
ernment and  the  carriers  to  serve  the  public.  To  bring  about 
this  combination  of  effort  on  the  part  of  the  public  authorities 
and  the  carriers  is  one  of  the  greatest  services  that  chambers  of 
commerce  can  render. 

Bearing  the  Cost  of  Seaboard  Terminals 

The  development,  unification,  and  effective  organization  of 
the  seaboard  terminals  will  require  large  expenditures  of  capital 
by  the  railroads,  steamship  lines,  and  public  authorities.  The 
costs  are  too  great  to  be  borne  entirely  or  mainly  by  the  city 
and  State  governments.  Private  capital  must  be  invested  in 
large  measure,  and,  of  course,  that  will  not  be  done  unless  the 
owners  of  capital  have  reasonable  assurance  that  their  invest- 
ments, in  the  long  run,  will  be  profitable.  The  policy  of  public 
authorities  towards  the  railroads  and  other  carriers  may  wisely 
be  as  liberal  as  the  policy  towards  manufacturing  and  other  in- 
dustries. In  regulating  the  railroads  the  public  should  remem- 
ber that  the  purpose  is  not  only  to  suppress  and  prevent  evil- 
doing  but  also  to  bring  about,  by  means  of  private  capital  if 
possible,  the  development  of  railway  and  port  terminal  facilities 
whereby  the  public  will  be  adequately  and  economically  served. 

The  Seaboard  Terminal  an  Absolute  Essential 

The  seaboard  terminal  is  as  essential  a  part  of  the  transporta- 
tion facilities  required  by  foreign  trade  as  are  efficient  railroads 
and  an  adequate  tonnage  of  ocean  shipping.  This  fact  is  more 
fully  realized  in  some  foreign  countries  than  it  is  in  the  United 
States,  and  one  of  the  transportation  problems  connected  with 
the  development  of  foreign  trade  is  that  of  giving  to  the  sea- 
board terminal  as  great  a  degree  of  technical  efficiency  as  has 
been  given  to  the  railroads  and  to  ocean  shipping. 

The  importance  of  seeking  systematically  to  distribute  the 
export  and  import  trade  of  the  United  States  among  the  nu- 
merous ports  through  which  foreign  trade  may  be  handled  is 
emphasized  by  the  serious  congestion  of  traffic  that  has  pre- 
vailed during  the  past  two  months  at  the  largest  seaport.  The 
natural  tendency  of  trade  is  to  center  at  a  few  points.  Each 
manufacturer  or  merchant  engaging  in  foreign  trade  desires  to 
be  located  where  his  principal  competitors  carry  on  business, 
and  consequently  the  largest  commercial  city  tends  to  grow  at 
the  expense  of  all  other  centers  of  foreign  trade.  The  concen- 
tration of  trade  at  one  or  a  few  centers  instead  of  its  distribu- 

51 


Second  Session — Monday  Afternoon 


tion  generally  among  numerous  ports,  greatly  increases  the  diffi- 
culty of  providing  adequate  transportation  facilities  for  handling 
foreign  trade,  especially  during  periods  of  business  expansion. 
This  concentration  of  commercial  activity,  moreover,  probably 
limits  the  possible  development  of  the  industries  and  commerce 
of  the  country  as  a  whole.  Industrial  progress  and  foreign  as 
well  as  domestic  trade  development  will  be  larger  and  more 
profitable  if  the  import  and  export  trade  is  distributed  among 
the  several  seaboard  gateways. 

Many  Sectional  Shipping  Ports  Desirable 

For  these  reasons,  it  should  be  the  definite  policy  of  the  rail- 
roads, the  shippers,  and  the  governmental  authorities  that  regu- 
late the  carriers,  to  work  to  bring  about  the  general  distribution 
of  foreign  trade  among  the  several  ports  of  the  United  States.  A 
policy  that  will  result  in  a  more  general  distribution  of  com- 
merce among  the  seaboard  cities  of  the  United  States  will  help  in 
the  solution  of  the  transportation  problem  connected  with  for- 
eign trade,  and  will  work  to  the  advantage  of  both  the  carriers 
and  the  public. 

A  wider  distribution  of  the  export  and  import  trade  of  the 
United  States  among  the  various  seaports  is  a  task  that  can  not 
be  accomplished  solely  by  the  railroads  and  by  government  au- 
thorities. Producers  and  importers  at  interior  points,  as  well 
as  exporters  and  importers  at  the  seaboard,  determine  the  routes 
over  which  most  of  the  foreign  trade  of  the  United  States  is 
carried.  A  better  distribution  of  traffic  can  be  brought  about 
only  by  the  cooperation  of  shippers  and  consignees  with  the 
railroads  and  steamship  companies.  A  campaign  of  education 
needs  to  be  conducted  to  bring  home  to  the  large  shippers  in 
various  parts  of  the  country  the  importance  of  routing  their 
export  and  import  traffic  via  the  seaboard  gateways  through 
which  the  traffic  can  be  handled  most  expeditiously  and  economi- 
cally. In  this  campaign  of  education,  commercial  organizations 
both  at  the  seaboard  and  in  interior  cities,  must  take  the  lead. 
These  organizations  are  in  a  position  to  render  a  great  service 
to  the  commerce  of  the  country. 

Necessity  for  Adequate  American  Tonnage 

The  most  pressing  present  and  future  transportation  problem 
connected  with  the  development  of  the  foreign  trade  of  the  United 
States  is  that  of  securing  an  adequate  tonnage  of  ocean  ship- 
ping. There  are  two  phases  to  this  question. 

52 


Transportation  and  Foreign  Trade 


The  first  phase  is  the  present  need  of  vessels  of  all  kinds, 
those  in  line  service  and  those  operated  under  charters.  Vessels 
under  neutral  flags  are  preferred  by  shippers,  but  ships  under 
other  flags  are  gladly  employed,  so  great  is  the  present  shortage 
of  ocean  tonnage.  The  situation  that  now  exists  is  probably  a 
temporary  one  which  will  come  to  an  end  shortly  after  the  declara- 
tion of  peace  in  Europe,  although  it  is  probable  that  the  destruc- 
tion of  shipping  during  the  war,  and  the  reduced  rate  of  con- 
struction now  prevailing  will  create  a  shortage  of  ocean  tonnage 
for  two  or  three  years  after  the  end  of  the  conflict. 

The  other  phase  of  the  general  question  of  ocean  transporta- 
tion facilities  for  handling  American  commerce  is  the  inadequate 
tonnage  of  vessels  registered  under  the  American  flag.  Since 
1900  the  foreign  trade  of  the  United  States  has  increased  with 
great  rapidity,  and,  during  the  past  year,  has  reached  unprec- 
edented proportions;  but  until  the  outbreak  of  the  European 
war  and  the  enactment  of  the  emergency  Ship  Registry  Act  of 
August  1 8,  1914,  the  tonnage  of  vessels  registered  under  the 
American  flag  for  service  in  the  foreign  trade  made  substantially 
no  progress  and  amounted  to  barely  a  million  tons.  Moreover, 
most  of  this  small  tonnage  was  employed  in  the  nearby  foreign 
trade  and  not  in  the  commerce  of  the  United  States  with  coun- 
tries beyond  the  Atlantic  and  Pacific. 

Dependence  of  Our  Overseas  Trade  Upon  Foreign  Ships 

The  European  war  has  brought  home  to  the  people  of  the 
United  States  more  clearly  than  they  ever  realized  before  the 
complete  dependence  of  the  foreign  trade  of  the  United  States 
upon  the  services  of  ships  under  foreign  flags;  and,  during  the 
past  year,  there  has  been  constant  discussion  in  the  press  and 
on  the  rostrum  of  possible  ways  and  means  for  building  up  the 
American  merchant  marine.  It  must  be  confessed,  however,  that 
no  program  of  legislative  action  has  yet  been  formulated  that 
promises  very  large  results.  The  question  of  the  enlargement 
of  the  American  merchant  marine  to  adequate  proportions  within 
a  reasonable  period  of  time  is  still  unsolved,  and  still  calls  for  the 
most  serious  study  on  the  part  of  legislators,  business  organiza- 
tions and  men  engaged  in  the  transportation  business. 

There  is,  I  take  it,  no  doubt  as  to  the  importance  of  having 
a  larger  tonnage  under  the  national  flag.  It  is,  of  course,  a  fact 
that  freight  rates  in  times  of  peace  do  not  depend  upon  the  flag 
of  the  vessel  that  performs  a  transportation  service.  The  owner 

53 


Second  Session — Monday  Afternoon 


of  a  ship  or  the  manager  of  a  line  of  vessels  will  ordinarily 
serve  one  shipper  as  willingly  as  another,  but  in  time  of  war 
shippers  in  neutral  countries  must  depend,  first,  upon  the  ton- 
nage of  the  world  is  operated,  and,  in  spite  of  the  destruction  of 
flags  of  other  neutral  foreign  countries;  and,  third,  upon  such 
part  of  the  shipping  of  belligerent  countries  as  may  be  available 
and  may  be  safely  used.  The  burden  which  the  present  Euro- 
pean war  has  placed  upon  the  commerce  of  neutral  countries  is 
a  heavy  one.  Freight  rates  are  many  times  normal  figures, 
and  the  shortage  of  tonnage  places  a  large  handicap  upon  inter- 
national exchanges. 

Direct  Effect  of  Control  of  the  Seas 

The  effect  of  the  present  war,  however,  severe  as  it  is,  is 
slight  in  comparison  with  what  the  result  would  be  were  not  the 
seas  controlled  by  one  of  the  belligerents,  and  the  theater  of 
marine  warfare  thereby  limited  to  restricted  areas  of  the  ocean 
near  the  coast  of  Europe.  The  flag  of  the  belligerent  that  has 
thus  limited  the  theater  of  marine  warfare  happens  to  be  the 
flag  under  which  more  than  two-fifths  of  the  total  deep-sea  ton- 
nage of  the  world  is  operated,  and,  in  spite  of  the  destruction  of 
shipping  that  has  occurred  during  the  past  year  and  of  the  with- 
drawal of  merchant  vessels  for  military  and  naval  uses,  the  com- 
merce of  the  world  is  able  to  employ  a  large  tonnage  of  vessels 
under  the  flag  of  belligerent  nations.  If  the  European  war  were 
being  waged  upon  the  sea  as  widely  as  it  is  being  fought  upon  land, 
American  foreign  commerce  would  be  practically  paralyzed  at 
the  present  time. 

Economic  Necessity  of  American  Merchant  Marine 

No  one  will  seriously  question  the  economic  necessity  of 
having  a  large  merchant  marine  under  the  national  flag  during 
such  a  war  as  is  now  in  progress,  but  there  are  many  who  still 
doubt  that  there  is  any  special  need,  other  than  a  naval  one,  for 
having  a  large  merchant  marine  under  the  national  flag.  It  is 
argued  that  the  merchant  vessels  of  all  nations  compete  with 
each  other  to  secure  the  traffic  of  all  countries,  and  that,  ocean 
freight  rates  being  controlled  by  this  competition,  it  matters 
not  to  the  people  of  the  United  States  whether  their  commerce 
be  handled  in  ships  of  American  or  foreign  registry.  The  argu- 
ment, however,  is  not  convincing. 

The  commerce  of  any  nation  largely  engaged  in  foreign  trade 
requires  the  services  both  of  steamship  lines  and  of  chartered 

54 


Transportation  and  Foreign  Trade 


vessels.  The  steamship  line  provides  a  service  at  regular  inter- 
vals, its  vessels  being  operated  under  a  more  or  less  definite 
schedule;  hence  a  steamship  line  cannot  be  profitably  established 
and  operated  unless  there  is  a  relatively  steady  flow  of  commerce 
between  the  domestic  and  foreign  ports  forming  the  termini  of 
the  route  over  which  the  line  vessels  are  run.  The  line  solicits 
and  transports  the  freight  of  small  shippers  as  well  as  big  ones 
and  thus  meets  the  general  transportation  needs  of  exporters 
and  importers.  The  regular  steamship  line  assists  exporters 
who  begin  in  a  small  way  to  build  up  a  larger  business.  The 
steamship  line,  however,  will  use  most  activity  to  develop  the 
traffic  of  the  shippers  of  the  vessel's  home  country  and  port.  A 
steamship  line  under  the  national  flag  is  an  agency  for  the  de- 
velopment of  foreign  trade. 

Coordination  of  Shipping  and  Terminal  Facilities 
The  establishment  of  a  steamship  line  usually  requires  the 
investment  of  capital  in  vessels  and  terminal  facilities.  It  is 
sometimes  possible  for  a  line  to  be  established  by  chartering 
vessels  and  by  using  public  terminals;  but,  while  this  is  a  prac- 
ticable method  of  starting  a  steamship  line,  the  successful  main- 
tenance and  development  of  a  line  requires  the  investment  of  a 
relatively  large  amount  of  capital.  If  the  conditions  for  the 
investment  of  this  capital  in  vessels  under  the  national  flag  are 
made  onerous  and  unfavorable  as  compared  with  the  conditions 
of  investment  under  foreign  flags,  capitalists  will  establish  a  line 
under  a  foreign  ensign,  or,  what  is  more  probable,  they  will  put 
their  money  into  some  entirely  different  enterprise,  into  rail- 
roading, manufacturing,  or  mining. 

Competition  of  Chartered  Vessels 

The  importance  to  a  country's  foreign  commerce  of  having 
under  the  national  flag  a  large  tonnage  of  vessels  operated  under 
charters,  that  is,  a  large  tonnage  of  "tramp"  steamers,  is  not  so 
definite  nor  so  vital  as  is  the  importance  of  having  a  number  of 
vigorous  steamship  lines  under  the  country's  flag;  although  it 
will  hardly  be  doubted  that  the  commerce  of  Great  Britain  has 
been  much  aided  by  the  enormous  tonnage  of  British  steamers 
operated  under  charters.  The  ownership  and  operation  of 
chartered  vessels  is  a  business  that  is  competitive  in  the  fullest 
sense,  and  that  country  will  invariably  have  the  largest  tonnage 
of  tramp  vessels  that  has  the  most  intelligent  and  liberal  mari- 
time policy.  There  can  be  no  hope  of  securing  for  the  service 

55 


Second  Session — Monday  Afternoon 


of  the  foreign  trade  of  the  United  States  a  large  tonnage  of 
chartered  vessels  under  the  American  flag  if  the  conditions  of 
operating  vessels  under  the  flag  of  the  United  States  are  more 
onerous  than  the  requirements  of  the  navigation  laws  of  other 
countries. 

The  Obligation  on  Congress 

The  importance  to  the  United  States  of  its  present  and  pros- 
pective foreign  trade  and  the  clear  need  for  a  larger  merchant 
marine  make  it  imperative  that  Congress  should  earnestly  seek 
to  adopt  a  maritime  policy  that  will  bring  about  a  larger  tonnage 
of  merchant  vessels  under  the  American  flag.  Thus  far,  differ- 
ences of  opinion,  both  without  and  within  Congress,  have  pre- 
vented constructive  legislation;  but  the  urgency  of  the  present 
situation  would  seem  to  give  promise  of  the  ability  of  Congress 
to  agree  upon  comprehensive  legislation  this  winter. 

An  agreement,  on  the  part  of  the  advocates  of  different  poli- 
cies, as  to  the  desirability  of  creating  a  Federal  shipping  board 
or  of  adding  to  an  enlarged  interstate  commerce  commission  a 
marine  department  consisting  of  three  commissioners  expert  in 
maritime  matters,  would  be  a  logical  foundation  upon  which 
to  build  up  a  law  for  the  development  of  a  larger  merchant 
marine.  It  must  be  apparent  to  Congress  that  the  problems 
connected  with  the  development  of  a  merchant  marine  are  tech- 
nical and  of  an  administrative  character. 

The  problems  are  technical  in  the  sense  that  the  ocean  ship- 
ping business  under  the  American  flag  is  governed  by  a  complex 
body  of  navigation  and  shipping  laws  regulating  the  construction, 
registry,  and  tonnage  measurement  of  vessels,  boiler  and  hull 
inspection,  the  employment  and  discharge  of  seamen  and  many 
other  details  of  the  conduct  of  a  complicated  business  carried  on 
under  conditions  of  world-wide  competition. 

Problem  of  Government  Aid  to  Merchant  Marine 

The  problem  of  rendering  effective  government  aid  to  the 
merchant  marine  is  of  an  administrative  character,  and  the  success 
of  any  legislation  concerning  shipping  must  depend  upon  the 
efficiency  of  the  executive  agency  entrusted  with  the  application 
and  enforcement  of  the  laws  enacted.  The  present  shipping 
laws  are  administered  by  various  bureaus,  most  of  which  are 
connected  with  the  Department  of  Commerce.  It  is  no  reflection 
upon  these  bureaus  or  upon  the  able  and  conscientious  chiefs 
thereof  to  say  that  the  present  machinery  for  the  executive 

56 


Transportation  and  Foreign  Trade 


regulation  and  aid  of  merchant  shipping  needs  the  unification 
and  strengthening  that  would  result  from  the  creation  of  an  ex- 
pert Shipping  Board  or  Marine  Department  of  the  Interstate 
Commerce  Commission. 

A  Shipping  Board  Proposed 

The  Shipping  Board  or  the  Marine  Department  of  the  Inter- 
state Commerce  Commission  would  be  a  body  of  experts,  which, 
like  the  Interstate  Commerce  Commission  as  regards  railroad 
regulation,  would  have  much  weight  with  Congress  in  all  matters 
of  legislation  regarding  shipping.  The  influence  of  such  a  board 
or  marine  department  would  be  similar  to  that  exercised  by  the 
marine  department  of  the  British  Board  of  Trade,  provided  the 
board  was  made  up  of  experts  of  high  standing  and  was  vested 
with  adequate  discretionary  executive  powers. 

This  board  should,  first  of  all,  be  directed  by  Congress  to 
investigate  the  shipping  and  navigation  laws  of  the  United 
States  and  to  report  at  an  early  date  a  revised  code  of  mari- 
time laws.  Such  a  board  should  make  a  careful  study  of  the 
maritime  legislation  and  regulations  of  the  leading  commercial 
nations  of  the  world  and  prepare  a  code  under  which  Ameri- 
can shipping  may  compete  upon  fair  terms  with  foreign  shipping. 

Authority  of  Shipping  Board  or  Marine  Department 

Congress  should  also  make  a  liberal  appropriation  to  be  ex- 
pended by  the  shipping  board  or  marine  department  in  aid  of 
shipping.  The  board  should  be  authorized  to  enter  into  con- 
tracts with  a  limited  number  of  steamship  lines  from  the  United 
States  to  foreign  countries.  Congress  should  leave  to  the  board 
the  selection  of  lines  to  be  aided,  the  amounts  to  be  paid,  and 
the  formulation  of  the  provisions  of  the  contracts  made  by  the 
Government  with  the  lines  aided.  By  giving  to  such  a  board 
the  responsibility  of  selecting  lines  that  will  be  of  real  assistance 
in  the  development  of  American  commerce,  better  results  can 
be  obtained  than  by  the  passage  of  subsidy  laws  such  as  have 
previously  been  enacted  by  Congress.  The  development  of 
American  shipping,  by  subvention  or  otherwise,  is  an  executive 
task  that  should  be  intrusted  to  an  able  body  of  experts  vested 
with  large  discretionary  powers. 

Suggestion  as  to  Personnel  of  Board  or  Department 

What  the  personnel  of  the  board  or  marine  department  should 
be  need  not  now  be  discussed;  possibly  a  board  of  three  men 

57 


Second  Session — Monday  Afternoon 


would  be  sufficiently  large.  The  law  creating  the  board  probably 
ought  to  authorize  the  Postmaster-General  to  deliberate  with 
the  board  when  contracts  involving  the  transportation  of  the 
mails  are  being  considered,  and  it  would  also  seem  desirable 
to  require  the  board  to  advise  with  the  Secretary  of  Commerce 
whenever  it  is  considering  matters  in  which  the  Department  of 
Commerce  is  interested.  Whether  the  Postmaster-General  or 
the  Secretary  of  Commerce,  or  both,  should  be  ex-officio  mem- 
bers of  the  shipping  board,  is  a  debatable  question,  upon  which 
I  would  not  care  to  commit  myself  at  the  present  time. 

Limitations  Upon  the  Board  or  Department 

The  proposed  shipping  board  or  marine  department  should 
not  have  the  power  to  engage  in  the  steamship  business,  either 
directly  or  indirectly.  It  would  be  a  mistake  for  Congress  to 
adopt  the  policy  of  the  government  ownership  of  ocean  vessels, 
or  of  the  operations  of  vessels  through  the  agency  of  a  cor- 
poration controlled  by  the  Government.  As  I  stated  in  a  recent 
address  to  the  American  Manufacturers'  Export  Association: 

"Adequate  ocean  transportation  by  ships  under  the  American 
flag  can  be  secured  only  by  making  the  ownership  and  operation  of 
vessels  profitable.  Private  capital  and  initiative  must  be  de- 
pended upon  to  bring  about  the  development  of  the  American 
merchant  marine.  In  the  long  run,  legislation  can  only  aid  in 
making  the  business  of  ocean  transportation  attractive  to  owners 
of  private  capital  and  to  men  ambitious  to  devote  their  energies 
to  the  management  of  steamship  lines.  Ocean  transportation  is 
not  a  business  adapted  to  government  ownership  and  manage- 
ment, and  the  reasons  for  this  are  almost  as  obvious  as  they  are 
convincing. 

"In  the  first  place,  it  must  be  clear  to  everybody  who  gives 
this  question  serious  thought  that  the  executive  capacity  of 
government  in  this  country  has  not  yet  gotten  beyond  the  ability 
to  regulate  business  affairs.  As  the  need  for  the  regulation  of 
transportation  has  become  apparent,  the  United  States  and  many 
of  the  States,  have  gradually  developed  increasingly  effective, 
but  still  by  no  means  perfect,  regulatory  agencies.  For  some 
time  to  come  the  administrative  machinery  of  government  will 
be  taxed  to  its  limit  by  the  work  of  regulating  transportation  and 
other  forms  of  industry.  Even  if  government  ownership  and 
operation  of  steamship  lines  were  theoretically  desirable,  the 
task  ought  not  to  be  undertaken  under  present  conditions. 

58 


Transportation  and  Foreign  Trade 


Government  Experience  in  Steamship  Management 

"Moreover,  such  limited  experience  as  the  Government  has 
had  in  the  ownership  and  operation  of  steamship  lines  does  not 
warrant  undertaking  the  task  on  a  larger  scale.  The  Panama 
Railroad  Steamship  Line  has  been  a  useful  facility  for  the  con- 
struction of  the  Panama  Canal.  It  was  wise  for  the  United  States, 
after  having  acquired  this  steamship  line  that  was  secured  along 
with  the  concessions  and  property  held  by  the  French  company 
at  Panama,  to  retain  and  use  the  line  to  transport  the  men  and 
material  required  for  the  construction  of  the  canal.  Construc- 
tion work  is  still  being  carried  on  at  Panama  on  a  large  scale, 
and  it  is  probable  that  the  Government  will  do  well  to  operate 
the  line  for  some  time  to  come.  Experience  will  show  whether 
it  is  necessary  to  retain  the  line  as  a  permanent  part  of  the 
operating  organization  of  the  Panama  Canal.  Had  the  Govern- 
ment run  the  Panama  Steamship  Line  purely  as  a  commercial  enter- 
prise in  competition  with  other  steamship  lines,  it  is  not  probable 
that  net  profits  could  have  been  shown.  Although  the  Panama 
Steamship  Line  has  been  well  managed,  it  has  not  been  profitable 
to  the  Government  except  as  a  facility  for  the  construction  of 
the  canal. 

Government  Ownership  of  Common  Carriers 

"If  the  Government  could  succeed  in  operating  ocean  vessels 
profitably,  it  ought  not  to  undertake  to  do  so.  The  government 
ownership  and  operation  of  transportation  facilities,  such  as 
railroads  or  steamship  lines,  if  justifiable,  is  only  so  under 
conditions  of  complete  nationalization.  When  a  government 
takes  over  all  the  railroads  in  a  country  and  operates  them  with 
reference  to  the  general  transportation  and  social  needs  of  the 
country,  it  may,  if  the  government  has  exceptional  executive 
ability,  as  is  true  of  some  countries  in  Europe,  be  successful  and 
perform  a  valuable  service  to  the  public.  On  the  other  hand,  the 
competition  of  government  railroads  with  private  lines  has  been 
shown  by  experience  to  be  unsuccessful  and  undesirable.  When 
the  government  starts  upon  the  acquisition  of  the  railways,  it 
should  continue  until  it  has  taken  over  the  entire  system  within 
the  country.  Regulation  of  transportation  by  forced  competition 
has  long  since  been  known  to  be  unsound  in  principle.  Regu- 
lation establishes  standards  of  services  and  rates  to  be  observed 
by  all  carriers ;  it  seeks  to  secure  what  competition  has  failed  to 
accomplish. 

59 


Second  Session — Monday  Afternoon 


Government  Competition  in  Transportation  Inherently  Wrong 

"It  is  believed  that  the  same  principles  apply  to  ocean  trans- 
portation. The  competition  of  government  and  private  lines 
would  prove  unsatisfactory  both  to  the  government  and  to  the 
public.  The  government  may  choose  between  public  ownership 
and  public  regulation,  and  whichever  choice  is  made  the  govern- 
ment may  enforce  standards  of  reasonableness  and  equity;  but 
the  establishment  of  government  lines  to  be  operated  in  compe- 
tition with  private  lines  would  be  wrong  in  principle,  and  could 
not  work  well  in  practice. 

"If  the  United  States  could  regulate  the  ocean  transportation 
business  successfully  by  the  establishment  of  government  lines, 
would  not  the  effect  of  competition  of  the  government  with  pri- 
vate lines  be  to  limit  the  investment  of  private  capital  in  ocean 
shipping?  There  is  no  reason  to  doubt  the  sincerity  of  those  who 
assert  that  they  would  hesitate  to  engage  in  business  in  compe- 
tition with  the  Government.  The  purpose  of  government  is  the 
accomplishment  of  public  ends;  the  object  of  private  investment 
and  private  management  is  business  profits.  One  having  capital 
to  invest  with  the  hope  of  securing  private  gains  will  naturally 
hesitate  to  invest  his  capital  in  a  business  where  he  must  compete 
with  government  enterprises  carried  on  not  to  make  dividends 
for  stockholders  but  to  further  general  public  ends." 

Board  or  Department  to  Popularize  Shipping  Business 

Instead  of  making  the  proposed  shipping  board,  or  marine 
department,  an  agency  by  means  of  which  the  Government  shall 
engage  in  the  steamship  business,  it  should  be  the  function  of  tKe 
board  to  establish  conditions  that  will  make  the  shipping  business 
more  attractive  to  private  capital.  The  duty  of  the  board  should  be 
to  guide  Congress  in  legislation  regarding  shipping,  to  be  the 
agency  through  which  appropriations  in  aid  of  shipping  are 
expended,  and  to  be  an  instrumentality  for  the  general  super- 
vision of  the  shipping  business.  The  board  should  have  full 
power  of  investigation.  It  would  pass  upon  the  formation  and 
proceedings  of  conferences  or  associations  of  steamship  com- 
panies and  advise  Congress  as  to  the  measure  of  regulation 
needed  to  insure  the  healthy  development  of  the  shipping  busi- 
ness and  to  safeguard  the  rights  of  different  classes  of  shippers. 
It  would  not  be  well,  at  least  at  the  outset,  to  give  the  board 
power  to  regulate  the  shipping  business  in  the  sense  that  the 
Interstate  Commerce  Commission  has  power  to  regulate  the  rail- 

60 


Transportation  and  Foreign  Trade 


roads.  The  Interstate  Commerce  Commission,  for  many  years, 
was  a  body  whose  powers  were  mainly  those  of  investigation  and 
supervision.  Its  mandatory  functions  were  limited.  It  is  not 
probable  that  the  shipping  business  will  ever  require  that  degree 
of  regulation  that  has  been  found  necessary  in  the  regulation  of 
railroads,  although  experience  in  the  supervision  of  ocean  trans- 
portation may  later  indicate  the  wisdom  of  applying  to  the 
ocean  transportation  business  many  of  the  principles  of  regula- 
tion that  have  been  followed  in  the  regulation  of  railroads.  How- 
ever that  may  be,  the  general  functions  of  a  shipping  board 
should,  at  the  beginning,  be  primarily  to  aid  and  supervise  rather 
than  to  regulate. 

Shipping  Facilities  But  One  Essential 

In  considering  the  transportation  problems  connected  with 
the  development  of  foreign  trade,  the  fact  should  not  be  for- 
gotten that  the  successful  growth  of  the  foreign  commerce  of 
the  United  States  does  not  depend  solely  upon  securing  more 
and  cheaper  transportation  facilities.  Transportation  is  an  es- 
sential facility  of  foreign  trade,  but  it  is  only  one  of  several  essen- 
tials. Commerce  is  the  result  of  successful  merchandising 
methods,  and  unless  American  producers,  exporters  and  im- 
porters are  good  merchants  they  will  be  worsted  in  the  foreign 
trade  by  the  competition  of  skillful  merchants  of  other  countries. 
This  is  a  fact  that  has  been  much  emphasized  in  recent  discus- 
sions, and  it  is  clear  to  everybody  that  the  American  trader  must 
meet  the  requirements  of  foreign  markets  in  order  to  secure 
a  large  trade  abroad.  Until  recently,  the  domestic  market  has 
been  so  large  and  has  so  overshadowed  the  foreign  market  that 
only  a  few  of  the  largest  producers  and  traders  have  cared  to 
adapt  their  methods  to  the  demands  of  foreign  buyers.  Indeed, 
most  producers  do  not  find  it  profitable  to  develop  foreign 
trade.  These  conditions  have  largely  passed,  and  it  is  probable 
that  American  producers  and  merchants  will  in  the  future  be 
able  to  meet  the  merchandising  requirements  of  foreign  trade. 

Need  of  American  International  Banking  Institutions 

International  banking  institutions  are  almost  as  important  as 
efficient  transportation  in  the  development  of  foreign  trade. 
The  provisions  of  the  Federal  Reserve  Act  have  made  possible 
the  establishment,  in  foreign  countries,  of  branches  of  American 
banks,  and  the  conditions  created  by  the  great  war  in  Europe 

61 


Second  Session — Monday  Afternoon 


have  given  American  banking  institutions  an  exceptional  oppor- 
tunity to  enter  foreign  fields.  While  only  a  beginning  has  yet 
been  made  in  the  establishment  of  the  international  banking  facil- 
ities required  for  the  successful  development  of  a  large  foreign 
trade  in  American  products,  what  has  thus  far  been  done  is 
encouraging.  It  is  believed  that  the  growth  of  the  foreign  com- 
merce of  the  United  States  will  not  be  seriously  hampered  by  the 
lack  of  banking  arrangements. 

Transportation  in  All  Its  Functions  the  Prime  Necessity 

With  the  adoption  of  the  necessary  merchandising  methods, 
and  with  the  establishment  of  adequate  international  banking 
arrangements,  the  growth  of  the  foreign  trade  of  the  United 
States  can  be  largely  promoted  by  the  creation  of  adequate  facili- 
ties for  the  expeditious  and  economical  transportation  of  the 
exports  and  imports  of  the  United  States.  The  transportation  and 
other  problems  connected  with  the  development  of  the  foreign 
trade  of  the  United  States  are  numerous  and  difficult,  but  they 
are  not  impossible  of  solution  if  the  American  people  and 
Congress  will  give  to  the  problems  the  serious  attention  which 
their  importance  merits. 

Let  me  emphasize  once  more,  in  closing,  the  thought  which 
has  been  uppermost  in  my  mind  as  I  have  been  speaking,  that 
it  is  not  important  that  the  individual  views  of  any  one  particular 
man  should  prevail,  but  that  we  should  approach  the  solution 
of  this  question  with  the  earnest  desire  to  reach  a  common 
basis  that  will  enable  us  to  get  somewhere  this  winter.  (Great 
applause.) 

THE  CHAIRMAN  :  The  subject  of  the  next  paper  which  you 
will  hear  seems  to  be  a  most  appropriate  one  under  the  present 
conditions.  To  all  of  you  the  name  of  the  Pennsylvania  Railroad 
Company  is  a  most  famous  one.  You  know  very  well  the 
efforts  and  care  that  have  been  taken  by  the  management  of 
that  road  to  prepare  for  all  emergencies,  with  the  result  that 
safety  is  the  one  thought  of  all  and  the  one  comfortable  thought 
in  patronizing  that  road.  I  have  the  honor  to  introduce  to  you 
Mr.  George  D.  Dixon,  Vice-President  of  the  Pennsylvania  Rail- 
road Company. 

MR.  DIXON:  Mr.  Chairman  and  Gentlemen:  Before  I  start 
to  read  my  article  I  would  like  to  say  just  one  word  to  you. 

While  I  was  moving  around  in  the  hall  I  overheard  some 

62 


Preparedness  and  Our  Railroads 


gentlemen  say  that  Mr.  Dixon's  paper  does  not  deal  with  the 
export  situation  at  all.  Now,  I  have  tried,  certainly,  to  prepare 
this  paper  with  the  export  situation  in  view,  but  I  have  dealt 
with  it  from  the  viewpoint  of  our  internal  transportation  ar- 
rangements; and  without  internal  transportation  arrangements 
that  will  meet  all  conditions,  we  will  never  be  able  to  handle  the 
export  business  of  this  country,  which  we  hope  is  coming  to 
us  within  the  course  of  the  next  few  years. 

The  export  freight  situation  which  has  suddenly  developed 
at  the  port  of  New  York  is  far  from  satisfactory  to  the  rail- 
roads, to  shippers  and  the  country  generally.  The  export  traffic 
in  the  past  year  has  grown  by  leaps  and  bounds  until  every 
transportation  company,  both  rail  and  water,  has  found  itself 
unequal  to  the  task  of  handling  it  satisfactorily.  What  will 
be  the  situation  six  months  from  now  if  this  traffic  continues 
to  grow  as  it  has  in  the  past  few  months — and  certainly  it  is 
reasonable  for  us  to  suppose  that  it  will  continue  to  grow 
possibly  even  more  rapidly?  The  American  nation  must  stand 
ready  to  help  supply  the  markets  of  the  world,  but  if  we  are 
to  do  this  we  must  be  prepared.  Preparedness  of  one  kind  and 
another  is  uppermost  in  all  of  our  minds  to-day,  and  for  that 
reason  I  think  this  is  a  propitious  occasion  upon  which  to 
say  a  few  words  on  that  subject  as  it  affects  the  transportation 
companies  of  this  country. 

Preparedness  and  Our  Railroads 

By  GEORGE  DALLAS  DIXON, 

Vice-President  in  Charge  of  Traffic,  of  the  Pennsylvania  Railroad  Company 

If  the  word  should  be  flashed  over  this  country  that  war 
had  been  declared  and  that  the  United  States  was  about  to 
enter  into  a  conflict  with  another  great  world  power,  our  con- 
dition of  preparedness — what  had  been  done  and  what  had  been 
left  undone — would  at  once  become  the  most  immediately  vital 
question  before  the  American  people. 

War  has  not  been  declared.  It  is  not  imminent  nor,  so  far 
as  we  can  see,  even  probable,  and  we  hope  that  it  never  will  be. 
But  we  have  been  compelled — even  though  unwillingly — to  con- 
sider possibilities,  and  already  national  preparedness  is  being 
given  much  thought. 

It  has  often  occurred  to  me  that  in  all  the  discussions  of  this 
subject,  one  of  its  most  important  phases,  possibly  its  most  im- 

63 


Second  Session — Monday  Afternoon 


portant,  has  been  overlooked  by  the  majority  of  people.  I  refer 
to  transportation.  Taking  everything  into  consideration,  it  is 
really  a  great  question  whether  it  is  not  every  bit  as  important 
that  our  railroads  should  be  prepared  for  national  defense  as 
it  is  that  our  Navy  and  our  Army  should  be  prepared. 

Military  Plans  Must  Be  for  Defense 

As  we  are  virtually  pledged  against  another  war  of  aggres- 
sion, our  military  plans  must  necessarily  be  plans  of  defense, 
with  a  greater  navy,  primarily,  and  a  greater  army,  secondarily, 
as  the  most  obvious  needs.  There  is  danger,  however,  that  the 
very  obviousness  of  these  necessities  in  any  plan  of  preparedness 
may  blind  the  eyes  of  Americans  to  another  necessity  which  is 
less  obvious  but  by  no  means  any  less  vital,  and  that  is  adequate 
preparation  for  the  mobilization  and  coordination  of  the  internal 
resources  of  the  country. 

This  means  good  railroads.  Not  merely  as  good  as  we  have 
now,  but  better. 

Suppose  that  a  hostile  army  was  about  to  invade  our  land. 
Can  we  exaggerate  the  importance  that  would  then  attach  to  an 
internal  transportation  system  at  the  highest  state  of  efficiency, 
with  every  facility  ready  to  render  the  maximum  of  service, 
whether  in  the  rapid  assembling  and  transportation  of  troops, 
the  movement  of  munitions,  or  the  carrying  of  the  materials 
required  for  the  erection  of  the  new  plants  that  would  probably 
be  necessary  to  meet  the  enormous  demands  for  military  supplies  ? 

Just  for  the  sake  of  argument,  imagine  that  the  United 
States  was  attacked  by  some  foreign  power — England,  or 
Germany,  or  France,  or  Italy,  or  Russia,  or  Japan,  or  any  other 
great  nation.  Consider  the  diversity  of  the  problems  that  would 
have  to  be  met  in  any  one  of  such  contingencies,  and  then  ask 
the  question:  What  part  would  the  American  railroads  play  in 
the  scheme  of  national  defense  and  what  would  be  expected  of 
them? 

The  Value  of  Railroads  in  Preparedness 

There  are,  to  be  sure,  abundant  commercial  reasons  why  it 
would  well  repay  the  American  people  to  conserve  and  encourage 
their  railroad  systems  and  make  their  more  rapid  expansion  and 
upbuilding  possible.  Well-constructed,  well-equipped,  properly 
manned,  skillfully  managed  and  solvent  railroads  are  necessary 
to  a  healthy  state  of  business.  But  as  a  military  resource,  a  vital 

64 


Preparedness  and  Our  Railroads 


element  in  preparedness,  they  would  be  valuable  beyond  the 
possibility  of  expression  in  terms  of  money. 

During  the  period  from  which  we  are  just  emerging,  when 
business  was,  to  say  the  least,  quiet,  our  railroads  were  unable, 
for  financial  reasons,  to  improve  their  properties  in  anticipation 
of  a  return  to  what  I  might  call  a  prosperous  era.  Their  earnings 
were  not  sufficient  to  warrant  investors  in  supplying  the  capital 
needed  to  provide  facilities  for  a  greatly  enlarged  traffic,  nor 
were  they  enough  to  enable  the  roads  to  put  by  a  surplus  for 
better  cars,  heavier  bridges,  more  modern  signals  and  all  of 
those  things  which  go  to  make  up  a  good  railroad,  but  which, 
except  to  a  very  small  extent,  do  not  increase  a  railroad's  earning 
power. 

Private  capital  is  ready  today  to  invest  in  our  American 
railroads  and  needs  only  the  assurance  that  the  people  and  the 
government  wish  to  see  it  allowed  a  fair  and  reasonable  return. 

Just  consider  how  helpful  it  would  be  now  to  the  country's 
welfare  if  our  railroads  had  the  facilities  needed  at  this  very 
moment  to  handle  our  export  commerce — I  might  almost  say, 
under  existing  circumstances,  the  world's  commerce. 

Railroads  Should  be  Prepared  for  Any  Emergency 

Certainly  the  present  situation  in  which  the  railroads  of 
this  country  find  themselves  should  be  adequate  proof  to  the 
people  that  our  railroads  should  be  prepared  for  any  possible 
emergency,  whether  it  be  to  handle  an  extraordinary  quantity 
of  traffic  such  as  is  now  being  offered  for  transportation,  or  for 
any  extraordinary  service  the  government  might  call  on  them 
to  perform. 

The  very  existence  of  the  Nation,  in  the  unhappy  event  of 
a  war,  might  well  hinge  upon  the  ability  of  our  interior  trans- 
portation systems  to  bear  the  tremendous  burden  that  would 
be  put  upon  them,  without  collapsing.  To  be  certain  of  so  doing, 
they  need  great  strength,  much  more  than,  as  a  whole,  they  have 
to-day. 

The  war  in  Europe  has  taught  no  surer  lesson  than  this, 
that  great  forces  of  men,  however  courageous  or  admirably 
trained,  are  of  little  military  value  without  the  means  of  moving 
them  with  promptness  and  order  and  of  keeping  their  many 
needs  continuously  supplied.  This  means  transportation  facilities 
that  can  be  counted  on  to  work  with  the  smoothness  and  cer- 

65 


Second  Session — Monday  Afternoon 


tainty  of  a  machine.    Without  such  facilities,  all  other  prepara- 
tions are  useless,  and  the  effort  put  into  them  wasted. 

The  railroads  have  played  an  important  part  in  all  the  great 
wars  of  the  last  three-quarters  of  a  century,  that  is,  in  every 
principal  struggle  of  nations  and  rulers  since  the  wars  of  Na- 
poleon. But  never  before  have  they  assumed  the  importance 
that  they  hold  in  the  present  war.  Practically  every  great  cam- 
paign in  Europe  during  the  last  fourteen  months  has  centered, 
at  some  crucial  stage,  about  the  possession  of  a  railway  line 
or  junction  point,  control  of  which  meant  rail  communication,  or 
the  loss  of  it,  for  one  side  or  the  other.  The  whole  land  cam- 
paign in  the  Balkan  States,  and  the  intricacies  and  ramifications 
and  intrigues  of  diplomacy  that  have  accompanied  it,  resolve 
themselves  into  a  struggle,  on  the  one  hand,  to  establish  a  line  of 
railroad  communication  between  Central  Europe  and  Turkey, 
and,  on  the  other  hand,  to  prevent  the  establishment  of  such 
a  line. 

The  Strength  of  the  Germans 

The  ability  of  the  Germanic  allies,  thus  far,  to  exist  within 
the  "Iron  Ring"  and  not  only  to  prevent  it  from  contracting 
with  a  crushing  pressure,  but  to  push  it  back  here  and  there 
and  even  to  break  through  it  in  places,  is  of  course  due  to  many 
factors,  but  certainly  to  none  more  than  to  that  perfection  of 
plans  and  facilities  for  railroad  transportation  in  every  direction, 
at  any  time,  which  was  one  of  the  principal  elements  in  Teutonic 
preparedness.  By  her  railroads  Germany  has  kept  her  armies 
and  material  resources  liquid,  and  they  have  flowed  from  one 
frontier  to  another  with  the  swiftness  and  smoothness  of  water. 

The  German  railroads  were  built  and  developed,  under  a 
militaristic  system,  with  a  first  eye  for  military  use.  Our  railroads 
were  built  by  private  capital  to  serve  the  needs  of  the  commerce 
of  a  non-militant  people,  and  are  in  themselves  commercial 
enterprises.  This,  however,  in  no  way  detracts  from  their  value 
for  military  purposes,  since  economic  law  has  seen  to  it  that  they 
connect  the  centers  from  which  men  and  supplies  must  be 
drawn  in  case  of  war. 

A  Wise  Investment. 

The  American  people  can  make  no  wiser  investment  in 
military  preparedness  ,and  can  buy  no  stronger  assurance  for  the 
preservation  of  the  Nation's  integrity,  than  by  allowing  their 
privately  owned  railroads  sufficient  income  at  all  times: 

66 


Preparedness  and  Our  Railroads 


1.  To  bring  all  track  and  roadway  up  to  standard  conditions 
and  maintain  it  thus. 

2.  To  construct  the  double,  triple  and  quadruple  tracking 
and  to  make  the  terminal  extensions  and  improvements  that  are 
required  now,  by  the  needs  of  peace,  and  which  would  be  of  im- 
measurably greater  value  if  the  railroads  were  ever  called  upon 
to  assist  in  military  operations. 

3.  To  acquire  sufficient  supplies  of  locomotives  and  cars  of 
modern  types,  and  to  reconstruct  or  replace  all  obsolete  equip- 
ment. 

4.  To  hold  in  the  service  a  sufficient  number  of  well-trained, 
well-paid  and  satisfied  men,  both  officers  and  employees,  to  assure 
prompt  and  efficient  operation  in  any  emergency. 

Some  railroad  systems  are  substantially  in  this  condition  at 
the  present  time,  but  many,  less  fortunately  situated,  are  not. 
If  all  were  enabled  to  become  so,  within  a  reasonable  time,  the 
Nation  would  be  possessed  of  a  military  resource  of  inestimable 
value. 

What  Could  the  Pennsylvania  Railroad  Offer  Our  Nation? 

To  gain  a  more  vivid  idea  of  what  our  railroads  could  be — 
and  ought  to  be — as  factors  in  preparedness  and  as  elements  in 
an  adequate  plan  of  national  defense,  let  us  turn  our  thoughts 
to  some  concrete  facts.  Let  us,  for  example,  take  the  Pennsylvania 
Railroad  System,  with  its  associated  lines,  and  consider  what  part 
it  could  play  and  what  it  could  offer  the  nation  in  time  of  need. 

In  the  first  place  it  could  offer  a  trained  and  disciplined 
army  of  more  than  200,000  men  for  the  performance  of  those 
indispensable  transportation  services  without  which  the  army 
and  navy  forces  would  be  helpless. 

It  would  probably  not  be  within  the  province  of  any  railroad 
management  to  decide  where  its  men  could  perform  the  greatest 
service — on  the  battlefield,  or  in  engine,  train  and  shop — or  to 
interfere  with  personal  freedom  as  to  enlistment,  but  the  gov- 
ernment would  no  doubt  decide  that  every  consideration  of 
wisdom  lay  in  maintaining  the  organization  of  this  and  other 
railroad  systems  substantially  intact. 

The  English  railroads  sent  a  considerable  number  of  men 
to  the  trenches  early  in  the  war,  but  in  the  first  few  weeks  of 
the  struggle  England  learned  the  value — indeed,  the  absolute 
necessity — of  unhampered  transportation,  even  though  the  actual 
battlefields  are  not  on  British  soil.  Both  England  and  France 
have  learned  the  lesson  of  the  extreme  unwisdom  of  sending 

67 


Second  Session — Monday  Afternoon 


to  the  front  those  men  who  have  the  special  mechanical  and 
other  training  and  experience  needed  to  keep  up  with  the  enor- 
mous demands  made  upon  the  national  resources  for  production 
and  transportation. 

Secondly,  the  Pennsylvania  Railroad  could  offer  the  nation 
a  physical  transportation  system  which  handles  the  most  exten- 
sive commercial  railway  traffic  in  the  world — a  system  embrac- 
ing more  than  11,000  miles  of  line  and  over  26,000  miles  of  track, 
with  terminals  in  the  three  largest  cities  of  the  country  and  in 
eight  out  of  the  ten  largest  centers  of  population. 

This  system  operates  only  about  one-twenty-fifth  of  the 
total  mileage  of  the  country,  but  it  carries  almost  one-eighth  of  the 
freight  traffic  and  more  than  one-eighth  of  the  passenger  traffic. 

This  railroad's  rolling  equipment  consists  of  the  following: 

Seven  thousand  five  hundred  locomotives  with  a  combined 
tractive  power  of  250,000,000  pounds. 

Seven  thousand  passenger  cars,  with  a  carrying  capacity  of 
330,000  people. 

Two  hundred  and  seventy-five  thousand  freight  cars,  with  a 
carrying  capacity  of  13,000,000  tons. 

The  Pennsylvania's  Motive  Power 

The  locomotives  owned  by  the  Pennsylvania  Railroad  Sys- 
tem have  power  sufficient  to  haul,  simultaneously,  over  any  ordin- 
ary grades,  soldier  trains  of  100,000  cars  in  all.  These  trains 
could  move  an  army  of  from  5,000,000  to  6,000,000  men  and  would 
fill  a  stretch  of  track  as  long  as  the  System's  main  line  from 
New  York  to  Washington  and  from  Philadelphia  to  Chicago. 
No  simultaneous  movement  of  men  on  such  a  scale  would  be 
actually  possible,  but  the  figures  give  some  idea  of  the  extent 
of  the  transportation  facilities  possessed  by  the  Pennsylvania 
Railroad  System,  and  which  would  be  available  for  the  service  of 
the  nation. 

In  addition  to  carrying  facilities,  this  System  has  vast  shop 
resources  and  a  great  body  of  skilled  mechanics.  The  railroad 
shops  at  Altoona,  Pa.,  alone — the  largest  of  their  kind  in  existence 
— employ  12,000  hands,  a  large  proportion  of  whom  are  highly 
trained  machinists.  Counting  all  the  shops  on  the  Pennsylvania 
System,  the  total  of  men  who  might  be  called  upon  for  specialized 
service  is  64,600. 

The  Pennsylvania  Railroad  has  in  its  service  many  other 
men  highly  trained  in  the  professions  and  trades,  or  in  special 

68 


Preparedness  and  Our  Railroads 


duties  which  from  the  standpoint  of  preparedness  might  make 
them  invaluable  to  the  nation. 

There  are  in  the  service  of  the  Pennsylvania  System  over 
700  civil  engineers,  all  of  whom  have  had  experience — many  of 
them  years  of  it — in  railroad  construction  and  maintenance. 
Think  of  the  value  of  these  men  to  the  country  in  directing  the 
work  of  planning  and  building  the  special  railroads  and  bridges 
that  would  be  required  for  military  purposes. 

On  the  pay  rolls  of  the  System  are  200  mechanical  and  chem- 
ical engineers,  who  direct  the  motive  power  work  at  the  various 
shops  and  roundhouses,  including  the  repair  and  construction  of 
locomotives  and  cars,  and  supervision  of  the  testing  of  materials. 
These  men  could  as  readily  turn  their  ability  and  technical  knowl- 
edge to  military  purposes. 

The  Territory  Served  by  the  Pennsylvania 

It  is  worth  while,  also,  to  consider  the  extent  and  resources 
of  the  territory  which  the  Pennsylvania  Railroad  System  tra- 
verses. 

It  serves  fifteen  States  and  the  District  of  Columbia,  having 
a  combined  population  of  more  than  40,000,000,  or  nearly  half 
of  all  the  people  in  the  United  States.  In  this  great  population 
there  are  probably  8,000,00  able-bodied  men  of  military  age,  with 
the  transportation  facilities  at  hand  for  quickly  mobilizing  them. 

In  the  territory  served  by  this  System  is  located  much  more 
than  half  of  the  fixed  and  liquid  wealth  of  the  country.  It  em- 
braces the  metropolis  of  the  nation  and  its  capital,  as  well  as  the 
principal  centers  of  finance,  of  foreign  trade,  of  iron  and  steel 
production,  of  ship-building,  of  the  manufacture  of  armor,  heavy 
ordnance  and  powder,  of  meat  packing,  of  the  grain  traffic  and  of 
various  other  important  industries  and  commercial  pursuits. 

The  region  includes,  also,  the  most  valuable  mineral  areas 
in  America.  It  produces  practically  the  entire  world's  supply  of 
anthracite  coal  and  about  half  of  the  bituminous  coal  output  in 
America,  besides  great  quantities  of  oil  and  other  minerals  es- 
sential to  military  purposes.  It  contains  great  chemical  works, 
and  plants  for  the  manufacture  of  textiles  and  clothing.  It  in- 
cludes agricultural  regions  of  unexcelled  fertility  which  yield 
every  American  crop  except  the  sub-tropical  fruits  and  which  are 
alone  much  more  than  capable  of  producing  sustenance  for  the 
entire  nation. 

It  so  happens  that,  because  of  geographical  location,  and  by 

69 


Second  Session — Monday  Afternoon 


reason  of  the  fact  that  it  links  together  these  principal  centers 
of  population  and  of  industrial,  mineral  and  agricultural  wealth 
and  production,  the  Pennsylvania  Railroad  System  as  an  aid  in 
defense,  as  in  peaceful  commerce,  would  inevitably  hold  a  place 
among  the  transportation  systems  second  to  none. 

A  National  Asset 

Considered  from  the  standpoint  of  preparedness  alone,  the 
resources  of  the  territory  served  by  the  Pennsylvania  Railroad 
lines  place  the  System  in  the  position  of  a  national  asset  and 
make  the  conservation  of  its  property,  equipment  and  organiza- 
tion at  the  highest  pitch  of  efficiency  a  consideration  of  primary 
importance  to  national  safety. 

But  the  Pennsylvania  is  only  one  of  the  nation's  great  rail- 
roads. For  military  purposes  all  of  our  railroads  would  have  to 
be  regarded  from  the  viewpoint  of  their  possibilities  as  one  sys- 
tem, and  the  nation  can  ill  afford  to  allow  any  part  of  this 
country-wide  system  of  250,000  miles  of  steel  highways  to 
deteriorate  or  to  continue  anywhere  impoverished  or  inefficient, 
for  what  I  have  said  of  the  importance  to  the  nation  of  the  Penn- 
sylvania Railroad  System  applies,  in  a  varying  degree,  to  all 
railroads. 

What  Would  the  Railroads  Mean  in  Time  of  War? 

If  the  railroads  have  meant  so  much  to  France,  England  and 
Germany  at  war,  with  their  comparatively  small  areas  and  rela- 
tively short  distances,  what  would  they  mean  to  this  country, 
under  a  like  circumstance,  with  great  cities  3,000  miles  apart, 
with  a  population  of  almost  100,000,000  scattered  over  2,974,000 
square  miles  of  territory  and  confronted  with  the  immediate 
necessity  of  greatly  increasing  the  industrial  output  and  trans- 
porting the  products  to  the  place  of  utilization,  of  developing 
untouched  and  remote  resources  and  of  organizing  and  mobiliz- 
ing large  armies  ? 

If  our  railroads  are  ever  called  upon  to  assist  in  the  nation's 
defense,  what  would  it  be  worth  to  the  American  people  to  have 
allowed  these  railroads  the  necessary  funds  required  for  the 
needed  double  and  quadruple  tracking,  extension  of  lines,  modern- 
izing of  all  equipment,  and  the  enlargement  of  the  terminal 
facilities  necessary  to  prevent  congestion? 

What  would  happen  to  America  if  its  railroad  transporta- 
tion system  broke  down  when  called  upon  by  the  people  of  the 
country  to  aid  in  her  defense  ?  These  are  pertinent  questions. 

70 


Legislation  Necessary  for  a  Merchant  Marine 

Next,  then,  to  an  adequate  army  and  navy,  if  not  indeed 
of  equal  importance,  is  the  condition  of  railroads  of  the  United 
States  as  a  factor  in  national  preparedness.  Only  railroads  of  the 
highest  efficiency  can  truly  unify  the  country  and  keep  its  re- 
sources of  men,  money  and  materials  in  a  liquid  and  mobile  state. 
As  a  military  precaution,  if  for  no  other  reason,  it  would  be 
in  the  highest  degree  wise  and  profitable  for  the  American  people 
to  see  to  it  that  their  railroads  have  sufficient  financial  resources 
to  be  able  to  serve  this  end  properly;  and  that  the  Federal  and 
State  governments  accord  them  treatment  which  will  insure  their 
healthy  growth  at  all  times. 

THE  CHAIRMAN  :  We  now  come  to  that  subject  which  is 
ever  recurrent  at  American  business  gatherings,  namely  that  of 
the  Merchant  Marine.  Mr.  Bernard  N.  Baker,  who  will  next 
address  you,  is  a  gentleman  who  has  had  long  experience  in  mat- 
ters pertaining  to  ocean  shipping,  and  moreover  has  been  a  close 
student  of  that  important  subject.  He  has  long  been  recognized 
as  an  authority  thereon.  I  have  much  pleasure  in  introducing 
Mr.  Bernard  N.  Baker,  of  Baltimore.  • 

Address  of  Mr.  Bernard  N.  Baker 

MR.  BAKER:  Mr  President  and  Gentlemen:  I  shall  not  keep 
you  very  long.  I  wish  I  could  fully  sustain  the  reputation  which 
your  worthy  president  has  given  me.  I  can  only  say  that  next 
probably  to  my  own  personal  interests  the  establishment  of  an 
American  merchant  marine,  and  seeing  once  more  the  American 
flag  on  the  ocean  carrying  our  commerce,  is  my  one  object. 

I  have  devoted  a  great  deal  of  time  and  thought  to  it  for 
many  years,  and  have  owned  a  controlling  interest  in  a  large  line 
of  steamers  and  it  was  a  most  interesting  business,  a  wonderful 
business,  not  local  in  its  character  but  very  broadening.  We 
had  to  name  rates  to  every  port  of  the  world. 

I  remember  a  great  many  years  ago  when  somebody  came 
in  and  asked  for  a  rate  on  mining  machinery,  I  think,  to  Nairobi. 
I  could  not  find  any  clerk  that  had  ever  heard  of  it  or  anybody 
else;  but  we  guessed  at  the  rate  and  named  it;  and  we  got  the 
business.  (Laughter.) 

Today,  however,  the  question  to  be  treated  is  legislation. 
What  legislation  is  needed  and  how  are  we  going  to  get  it  are  the 
points  which  I  shall  endeavor  to  cover,  and  I  shall  take  but  a 
very  few  moments  of  your  time. 

71 


Second  Session — Monday  Afternoon 


I  want  to  say  now  that  if  anything  occurs  to  you  that  you 
desire  to  ask  any  questions  about,  if  you  will  make  a  note  of 
them,  when  the  time  conies  for  discussion  I  shall  be  glad  to 
answer  them  to  the  best  of  my  ability,  and  probably  be  as  far 
wrong  as  almost  anybody  else;  but  I  shall  try  to  do  the  best  I 
know  how. 

In  every  political  platform  of  the  last  thirty  years  of  every 
party,  Democratic,  Republican  and  even  our  Progressive  friends, 
they  have  included  a  clause  or  a  plank  that  the  merchant  marine 
should  be  developed;  must  be  developed,  that  we  must  have  a 
merchant  marine  in  this  country. 

Traveling  all  over  the  country  very  recently,  in  the  past 
two  or  three  weeks,  I  have  visited  every  place  I  could  think  of 
where  the  question  of  the  merchant  marine  was  uppermost  and 
have  made  a  study  of  conditions  in  those  places  and  have  found 
it  intensely  interesting,  and  that  terrible  conditions  exist. 

I  shall  try,  to-day,  to  give  you  the  history  of  this  ques- 
tion and  of  the  bills  which  have  been  passed. 

The  first  of  these  important  bills  in  the  thirty  years  was  what 
was  known  as  the  Mail  Contract  Act,  passed  March  3,  1891. 
You  see  that  is  some  twenty-five  years  ago. 

Under  the  terms  of  that  Act  there  are  a  number  of  ships 
operating  to-day;  some  of  them  very  successfully,  some  with  in- 
different success. 

It  was  intended,  originally,  to  establish  a  fast  mail  line 
of  steamers  between  here  and  European  ports.  It  accomplished 
that,  but  only  in  a  measure.  They  were  fast  ships  for  those 
days.  A  good  many  of  us  can  remember  when  the  "Paris"  made 
her  famous  voyage.  It  was  the  fastest  trip  across  the  ocean; 
but  it  takes  a  very  little  while  for  a  ship  to  become  obsolete, 
either  in  money  earnings  or  in  mail-carrying  use.  Improve- 
ments come  so  fast  that  depreciation  on  shipping  property  is 
more  rapid  in  character  of  construction  than  it  is  in  actual  wear 
and  tear  on  the  ship.  It  is  like  your  manufacturing  machinery. 
While  a  good  many  of  you  busy  manufacturing  men  know  that 
you  have  to  install  new  machinery,  it  is  true  with  respect  to  a 
ship  that  in  a  very  few  years  the  ship  becomes  obsolete.  They 
must  allow  certain  fixed  percentages  of  depreciation  per  annum. 

The  next  bill  following  that  was  last  August,  a  year  ago, 
when  there  was  passed  the  Ship  Registry  Bill  and  the  War  Risk 
Insurance  Bill. 

The  Ship  Registry  Bill  has  added  a  good  deal  of  tonnage. 

72 


Legislation  Necessary  for  a  Merchant  Marine 

There  is  no  question  about  that.  Large  public  interests  like  the 
Standard  Oil,  the  United  Fruit  Company  and  the  United  States 
Steel  Corporation  have  transferred  their  ships  to  our  flag,  and 
added  considerable  tonnage;  but,  unless  conditions  are  altered, 
I  think  I  am  safe  in  saying  that  a  large  proportion  of  that  tonnage 
will  again  be  transferred  to  foreign  flags,  because  it  is  to  the 
business  man's  interest  to  do  so,  as  a  question  of  earnings  in 
dollars  and  cents;  and  that  is  what  he  is  working  for.  He  has 
some  patriotism  in  it,  thank  God.  Very  often  we  see  it  and  are 
glad  to  see  it.  There  has  been  a  great  deal  in  the  merchant 
marine  done  from  patriotism. 

Following  these  two  measures  last  year  was  what  was 
known  as  the  La  Follette  or  Seamen's  Bill.  I  want  to  read  you 
a  quotation  from  a  letter  written  by  Secretary  McAdoo  to  a 
friend  of  mine,  outlining  the  history  of  this  bill,  because  it  is 
rather  an  interesting  history. 

This  bill  was  passed  by  both  Houses  of  the  62nd  Congress, 
that  is  prior  to  the  last  Congress — it  is  the  64th  now —  and  was 
vetoed  by  President  Taft  before  the  close  of  the  administration. 

(Following  is  Mr.  Baker's  paper  in  full)  : 

'Legislation  Necessary  for  a  Merchant  Marine 

By  BERNARD  N.  BAKER, 

Former  President  of  the  Atlantic  Transport  Line 

In  every  political  platform  of  the  different  parties  for  the  past 
thirty  years  there  has  been  a  plank  promising  to  give  to  our  coun- 
try a  merchant  marine.  In  every  session  of  Congress  there  have 
been  various  bills  offered,  sometimes  passed  by  the  Senate  and 
sometimes  by  the  House,  but  never,  with  but  three  exceptions, 
has  there  been  any  legislation  passed  in  this  very  important  interest 
of  our  country:  first  was  the  Act  of  March  3,  1891,  known  as 
the  "Mail  Contract  Act."  Such  is  the  condition  of  legislation 
affecting  our  merchant  marine,  with  the  exception  of  the  Act  of 
August,  1914,  known  as  the  "Ship  Registry  Bill"  and  "War  Risk 
Insurance  Bill":  these  were  passed  as  temporary  measures  at 
the  beginning  of  the  present  war  in  Europe  to  overcome  difficulties 
at  that  time.  Following  this  was  what  is  known  as  the  La  Follette 
or  Seamen's  Bill.  The  bill  was  passed  by  both  Houses  of  the 
Sixty-second  Congress,  and  was  vetoed  by  Mr.  Taft  just  before 
the  close  of  his  administration. 

73 


Second  Session — Monday  Afternoon 


The  "Party"  Platforms 

The  Republican  national  platform  of  1912  contained  the 
following : 

"We  favor  the  speedy  enactment  of  laws  to  provide  that  seamen  shall 
not  be  compelled  to  endure  involuntary  servitude  and  that  life  and  property 
shall  be  safeguarded  by  the  ample  equipment  of  vessels  with  lifesaving 
appliances  and  with  full  complements  of  skilled  able-bodied  seamen  to 
operate  them." 

The  Democratic  national  platform  of  1912  contained  the 
following : 

"We  urge  upon  Congress  the  speedy  enactment  of  laws  for  the  greater 
security  of  life  and  property  at  sea;  and  we  favor  the  repeal  of  all  laws 
and  the  abrogation  of  so  much  of  our  treaties  with  other  nations  as 
provide  for  arrest  and  imprisonment  of  seamen  charged  with  desertion, 
or  with  the  violation  of  their  contract  of  service.  Such  laws  and  treaties 
are  un-American  and  violate  the  spirit  if  not  the  letter  of  the  Constitution 
of  the  United  States." 

The  "Seamen's  Bill" 

Both  national  parties  were,  therefore,  committed  to  the  Sea- 
men's Bill.  It  was  introduced  in  the  Sixty-third  Congress,  and, 
after  almost  two  years  of  consideration,  was  passed  by  the  House 
of  Representatives  without  a  division,  and  by  the  Senate  without 
a  division;  so  that  no  objection  having  been  offered  by  any  mem- 
ber of  any  political  party,  both  the  House  and  the  Senate  may  be 
said  to  have  passed  the  bill  unanimously.  A  Conference  Com- 
mittee of  the  Senate  and  the  House  presented  a  report,  which  was 
adopted  by  the  Senate  and  the  House,  again  without  division,  so 
that  each  Chamber  may  be  said  to  have  adopted  the  Seamen's  Bill 
in  the  form  in  which  it  went  to  the  President,  by  unanimous  vote, 
as  no  one  raised  any  objection  to  it. 

This  is  the  history  of  this  legislation,  and  it  contains  many 
very  valuable  provisions,  and  with  slight  changes,  which  will  be 
made  by  the  proposed  Shipping  Board,  would  meet  all  the  de- 
mands of  shipowners  and  crews.  All  the  other  legislation  and 
laws  affecting  our  merchant  marine  are  antiquated,  to  say  the  least. 

Consideration  of  the  Subject 

Now  let  us  consider  this  important  question  under  the  three 
following  heads: 

First,  as  to  the  present  condition  of  the  merchant  marine  and 
our  facilities  for  foreign  commerce,  and  the  congested  conditions 
affecting  all  our  exports. 

74 


Legislation  Necessary  for  a  Merchant  Marine 

Second,  the  necessary  remedies. 

Third,  how  can  we  secure  the  legislation  to  bring  about  the 
remedy  ? 

Congestion  of  Marine  Traffic 

A  recent  visit  to  all  the  more  important  Atlantic,  Gulf  and 
Pacific  Coast  ports  has  demonstrated  undoubtedly  that  a  terrible 
congestion  exists  at  all  the  ports,  due  to  the  absence  of  the 
necessary  tonnage  in  our  foreign  trade  to  properly  give  our 
farmers,  cotton  planters,  lumbermen,  manufacturers  and  mer- 
chants the  facilities  they  ought  to  have  for  the  development  of  the 
important  opportunities  which  now  await  us.  It  is  particularly  dis- 
tressing in  the  Northwest  and  on  the  Pacific  Coast,  where  today 
fruit  is  lying  on  the  ground  going  to  decay,  when  there  is  an 
enormous  demand  for  it,  if  the  facilities,  which  are  impossible  to 
secure  to-day  could  be  found  for  transportation  to  foreign 
countries. 

When  a  prominent  New  York  journal,  one  of  our  conserva- 
tive leaders  in  development,  the  New  York  Times,  finds  it  neces- 
sary, as  it  did  a  few  days  ago,  in  large  type,  to  describe  conditions 
as  follows,  "America  menaced  by  ship  shortage,"  it  is  manifestly 
a  fact  that  America  is  menaced. 

Again  there  comes  a  piteous  plea,  in  a  wireless  message  to 
the  people  of  San  Francisco,  from  the  captain  of  the  last  ship 
under  the  American  flag,  on  leaving  the  port  of  Seattle  on  her 
way  to  a  foreign  country  to  be  placed  under  the  British  flag.  May 
I  read  this  to  you  ? 

To  the  Good  People  of  San  Francisco,  via  the  San  Francisco 
Examiner.  The  Great  Northern  Steamship  Minnesota,  the  finest  ship  that 
ever  sailed  the  seas  and  the  largest  ship  flying  the  American  flag,  is  now 
passing  down  by  your  beautiful  city  bound  to  a  foreign  country,  never 
again  to  return  with  Old  Glory  floating  over  her  stern.  The  reason  for 
it  is  well  known  to  all  the  business  interests  of  our  country.  I  bid  you  all 
farewell.  THOMAS  W.  GARLICK, 

Commander  S.  S.  Minnesota. 

Now,  this  is  the  message  of  a  great-hearted  sailor  to  you. 
Captain  Garlick  is  known  from  Seattle  to  Hongkong,  from  Manila 
to  Sydney,  and  back  to  San  Francisco,  as  an  American,  and  now 
to  be  ordered  to  take  his  ship  from  the  well-worn  Great  Circle 
Route  and  take  her  to  find  another  flag,  has  been  no  less  than  a 
tragedy  to  him.  She  has  been  turned  over  to  British  interests 
and  in  a  few  hours  will  cross  the  meridian  of  Point  Loma  and  her 

75 


Second  Session — Monday  Afternoon 


wake  will  mark  the  passing  of  this  country's  flag  from  the  far  sea 
lanes  of  the  Pacific  Ocean. 

Why  should  I  take  more  of  your  time  to  tell  you  of  condi- 
tions. I  could  keep  on  for  a  long  time  but  these  are  two  state- 
ments, one  from  the  Atlantic,  and  one  from  the  Pacific,  which 
seem  to  me  sufficient,  for  I  know  you  are  business  men  and  busy 
men,  and  many  of  you  have  realized  the  contraction  of  your 
business  and  opportunities  by  conditions  as  they  are  to-day  in  the 
lack  of  tonnage. 

Remedies 

Second.  The  Remedy.  Let  us  all  join,  and  if  we  cannot 
secure  by  legislation  everything  we  find  necessary,  let  us  still 
unite  to  secure  what  we  can.  My  suggestion  is  that  a  Bill  be 
presented  to  Congress  giving  authority  to  the  President  to  nom- 
inate, subject  to  the  confirmation  of  the  Senate,  a  Shipping  Board 
of  three  men,  with  the  Secretary  of  the  Navy  and  the  Secretary 
of  Commerce  ex-officio  members  thereof ;  failing  their  attendance 
at  any  meeting,  they  can  be  represented  by  acting  Secretaries  of 
their  Departments,  so  that  all  questions  considered  by  the  Ship- 
ping Board,  especially  as  they  affect  commerce  or  naval  subjects, 
will  have  the  benefit  of  the  cooperation  of  that  particular  Depart- 
ment of  the  Government.  Give  to  this  board  the  authority  to 
establish  a  naval  reserve  on  all  the  ships  under  our  flag,  subject 
to  the  approval  and  cooperation  of  the  Secretary  of  the  Navy. 
Let  them  arrange  for  the  appointment  of  one  naval  cadet  to  each 
1,000  tons  of  gross  registered  tonnage.  Give  to  the  members  of 
the  Senate  and  House  of  Representatives  the  nomination  of  the 
appointments  in  order  of  application  for  naval  apprentices  on 
these  ships,  in  cooperation  with  the  Secretary  of  the  Navy.  Upon 
the  recommendations  to  the  United  States  Shipping  Board,  the 
Secretary  of  the  Navy  shall  appoint  a  board  of  naval  officers  to 
examine  and  report  upon  any  officers,  engineers  or  seamen  for  the 
purpose  of  ascertaining  their  ability  in  every  way  as  officers,  en- 
gineers or  able-bodied  seamen,  for  a  Naval  Auxiliary  Reserve; 
such  men  to  report  at  least  once  every  year  for  examination,  at 
such  times  and  places  as  are  designated  by  the  Secretary  of  the 
Navy.  The  men  passing  such  examinations  as  suitable  for  a  naval 
reserve  shall  be  entitled  to  use  such  designation  as  the  Shipping 
Board  may  apply  to  them. 

Development  of  Overseas  Commerce 

Give  authority  to  the  Shipping  Board  to  make  all  rules  and 
regulations  necessary  for  the  most  efficient  development  of  our 

76 


Legislation  Necessary  for  a  Merchant  Marine 

commerce  as  affected  by  all  questions  of  shipping,  navigation  or 
waterborne  commerce,  also  as  to  manning  and  safety  at  sea.  All 
rules  and  regulations  now  in  force  will  remain  so  only  until  mid- 
night of  the  3ist  of  December,  1916,  or  at  such  earlier  date  as 
may  be  approved  by  the  President  of  the  United  States ;  and  by 
proclamation  of  the  President  they  shall  cease  to  have  any  force 
or  validity  at  any  prior  date,  when  the  new  shipping  rules  and 
regulations  shall  be  provided  by  the  Shipping  Board  to  take  the 
place  of  those  now  in  force. 

Postal  and  Freight  Rates 

Subject  to  the  approval  of  the  Postmaster-General,  the  Ship- 
ping Board  shall  report  and  make  recommendations  for  any 
changes  necessary  in  the  Postal  Act  of  March  3,  1891,  to  fully 
develop  mail  lines  of  steamers  to  such  port  or  ports  as  the  result 
of  their  investigations  may  determine  to  be  desirable  for  the  de- 
velopment of  commerce  and  the  mail  facilities  of  the  United 
States,  such  recommendations  to  be  submitted  to  Congress  at  the 
next  ensuing  session  for  consideration.  Give  to  the  Shipping 
Board  authority  to  investigate  discrimination  in  ocean  rates  of 
freight  and  the  regulation  of  same,  and  to  cooperate  with  the 
railroads  in  pro-rating  on  all  foreign  commerce  in  connection  with 
the  Interstate  Commerce  Commission. 

Subsidy  or  Government  Ownership 

Give  the  Board  an  appropriation  of  $60,000,000  for  the  de- 
velopment of  the  merchant  marine.  To  invest  this  amount  or 
any  portion  of  it  in  the  building,  acquiring,  leasing,  chartering, 
operating,  if  necessary,  or  sale  of  ships,  or  for  investment  in 
any  corporations  now  existing  or  hereafter  created,  or  to  any 
Railroad  Company  in  the  extension  of  its  line  to  foreign  ports; 
also  authority  to  create  a  corporation  or  corporations  for  the 
purpose  of  establishing  lines  of  steamers  to  such  foreign  ports, 
and  with  the  cooperation  of  such  foreign  countries  as  will  best 
develop  our  commerce,  but  only  when  such  loans  or  investment 
are  secured  as  a  prior  lien  on  all  the  assets  of  any  such  corpora- 
tion or  corporations,  to  which  assistance,  cooperation  or  invest- 
ment may  be  given  or  any  money  advanced  by  the  Shipping 
Board,  prior  to  all  liens  of  every  character  which  such  corpora- 
tions may  assume,  provided  in  no  circumstances  shall  such  assist- 
ance or  cooperation  be  given  when  the  service  to  such  foreign 
ports  is  efficiently  covered  by  existing  American  corporations  or 
individuals. 

77 


Second  Session — Monday  Afternoon 


Secretary  McAdoo  on  the  Subject 

I  quote  the  following  from  a  personal  letter  of  Hon.  Secre- 
tary McAdoo  to  Hon.  A.  B.  Farquhar,  York,  Pa.,  November  5, 


Now  about  the  shipping  question.  This  is  such  a  vital  economic 
problem,  and  the  future  prosperity  and  welfare  of  this  country  is  so  bound 
up  in  its  wise  solution,  that  I  feel  most  intensely  and  earnestly  the 
necessity  for  wise  and  prompt  action  by  the  Congress.  I  am  not  wedded 
to  any  view.  I  have  strongly  advocated  the  views  I  have  advanced 
because  they  seem  to  be  the  only  views  that  afford  any  sort  of  practical 
solution  of  the  problem.  If  some  one  else  can  present  a  solution  that  is 
more  practical  and  will  be  more  efficacious,  I  shall  be  as  quick  to  support 
it  as  I  have  been  earnest  in  urging  the  views  I  have  already  presented. 

We  must  take  this  question  up  from  the  standpoint  of  patriotism 
and  intelligence,  because,  if  we  are  inspired  by  patriotism,  our  hearts  will 
be  right,  and,  if  controlled  by  intelligence,  our  judgments  will  be  right. 
We  must  think  of  America  first,  and  subordinate  everything  else,  including 
our  personal  interests,  to  the  welfare  of  our  beloved  country. 

How  to  Secure  Needed  Legislation 

As  to  the  third  subject.  How  can  we  secure  this  legislation? 
I  should  like  to  state  now,  while  this  is  so  crudely  expressed  and 
subject,  of  course,  to  many  changes  in  the  proper  preparation 
of  such  a  bill  fully  covering  these  general  principles,  that  such 
legislation  can  be  secured  if  you  business  men  will  all  unite  in 
your  efforts,  entirely  independent  of  politics  or  personal  inter- 
ests, for  the  passage  of  such  legislation,  and  not  only  are  you  in- 
terested, but  the  whole  country,  the  laborer,  the  farmer,  the  manu- 
facturer, the  banker  and  the  merchant,  every  one  is  equally  inter- 
ested as  patriotic  citizens  of  our  country,  and  they  should  add 
their  appeals  to  Congress  to  pass  such  a  bill  as  will  place  our 
country  once  again  in  the  position  we  had  prior  to  1860,  as  the 
mistress  of  the  seas,  not  in  war,  but  in  peace,  in  carrying  the 
commerce  of  the  world. 

I  thank  you,  gentlemen,  very  much.  Mr.  Woolley  is  here, 
who  will  give  you  the  Administration  point  of  view,  which  I  am 
not  authorized  to  do. 


THE  CHAIRMAN  :  Gentlemen,  the  honorable  Secretary  of  the 
Treasury  was  invited  to  address  you  at  this  Conference,  but  you 
will  all  appreciate  that  it  is  practically  impossible  for  any  officer 
of  the  Administration  to  be  away  from  our  national  capital  just 
at  this  time,  and  he,  with  a  great  deal  of  interest,  has  delegated 
Mr.  Woolley,  Director  of  the  Mint,  to  represent  him  here. 

I  have  the  pleasure  to  introduce  to  you  Mr.  Robert  W. 
Woolley,  Director  of  the  Mint. 

78 


A  Government  Controlled  Merchant  Marine 

A  Government  Controlled  Merchant  Marine 

By  ROBERT  W.  WOOLLEY, 

Director  of  the  Mint 

Mr.  Chairman  and  Gentlemen :  First  of  all,  I  beg  to  convey 
to  you  the  sincere  regrets  of  the  Secretary  of  the  Treasury  that 
he  found  it  impossible  to  address  you  this  afternoon.  As  you 
know,  the  opening  session  of  the  Sixty-fourth  Congress  begins 
to-day,  and  the  demands  upon  his  time  are  very  great.  He  found 
it  necessary  to  request  another  to  speak  to  you  of  the  great 
undertaking  to  which  he  is  devoting  so  much  thought  and  energy 
— a  Naval  Auxiliary  Merchant  Marine.  I  feel  deeply  the  com- 
pliment shown  in  asking  me  to  perform  this  important  and 
pleasant  duty,  and  I  only  hope  that  I  may,  even  though  I  do  so 
feebly,  impress  you  with  some  of  the  reasons  which  Mr.  McAdoo 
and  those  of  us  associated  with  him  in  this  fight  for  a  return 
of  the  Stars  and  Stripes  to  the  lanes  of  commerce  on  the  seas 
deem  potent. 

The  Freight  Congestion 

The  most  powerful  of  all  arguments  that  something  must 
be  done  is  that  approximately  fifty  thousand  freight  cars, 
loaded  with  commodities  for  home  consumption  and  foreign  ship- 
ment, are  crowding  the  yards  and  choking  the  main  lines 
of  every  railroad  leading  into  New  York  and  its  environs.  So 
great  is  the  demand  and  so  few  are  the  ships  that  the  most  strin- 
gent measures  to  relieve  the  congestion  at  this  and  other  Atlantic 
ports  are  being  resorted  to  by  the  railroads.  The  Pennsylvania, 
the  New  York  Central,  the  Baltimore  and  Ohio,  the  Lackawanna 
and  other  great  systems  have  had  to  place  a  ban  on  certain 
articles  destined  for  New  York,  and  a  committee  of  representa- 
tives of  all  the  roads  centering  here  meets  daily  to  consider  this 
vital  matter  of  congestion  of  traffic.  So  inadequate  is  the  supply 
of  ships  that  what  has  been  aptly  termed  as  "overeating"  on 
the  part  of  the  railroads  has  become  an  evil  demanding  prompt 
and  heroic  treatment. 

It  is  estimated  that  there  are  today  in  the  freight 
cars  crowding  the  railroad  yards  of  New  York  and  its 
immediate  vicinity  approximately  700,000  tons  of  commodities 
awaiting  shipment  to  the  Old  World.  A  railroad  ton  rep- 
resents 40  cubic  feet,  a  ship  ton  100  cubic  feet.  It  is  also 
estimated  that  50,000  ship  tons,  or  125,000  railroad  tons  of 
these  commodities  are  daily  being  loaded  into  vessels.  Of -course, 

79 


Second  Session — Monday  Afternoon 


the  arrival  of  tonnage  every  twenty-four  hours  from  the  interior 
is  proportionately  much  greater;  that  is  the  reason  for  the  con- 
gestion. It  is  easily  seen,  therefore,  that  conditions  are  getting 
worse  every  day. 

However,  I  have  not  come  here  to  preach  calamity.  In  the 
words  of  the  immortal  Lincoln,  "this,  too,  will  pass."  But  the 
lesson  of  it  will  be  lost  and  our  stupidity  will  be  emphasized  if 
we  do  not  take  careful  and  practical  thought  of  the  morrow. 
Let  us  not  mistake  for  sound  reasoning  the  words  of  denuncia- 
tion indulged  in  by  those  who  see  scarlet  and  cry  "Socialism !" 
whenever  the  possibility  of  our  Government  owning  ships  engaged 
in  commerce  is  suggested,  but  I  ask  you  business  men  to  con- 
sider the  facts  and  to  judge  impartially  the  proposition  which 
is  about  to  be  advanced  in  the  shape  of  Secretary  McAdoo's  bill 
providing  for  a  Naval  Auxiliary  Merchant  Marine. 

The  Administration  Will  Not  Grant  Subsidies 

We  are  caught  redhanded,  the  victims  of  our  short-sighted- 
ness of  former  days — yes,  even  of  less  than  a  year  ago  when 
the  Congress  refused  to  pass  a  Ship  Purchase  bill — and  yet  there 
are  men  of  large  affairs  whose  opinions  are  widely  respected 
and  whose  advice  is  greatly  sought  in  matters  paramount,  who 
cynically  observe  that  all  would  be  well  if  the  Government  of 
the  United  States  were  to  grant  a  subsidy,  then  keep  hands  off  and 
let  capital  do  the  rest.  Well,  that  isn't  going  to  happen;  not  in 
this  day  of  the  death  struggle  of  privilege  and  of  the  dawn  of  the 
renaissance  of  fair  play.  Uncle  Sam's  engagement  as  "Aladdin's 
Lamp,  Limited"  has  closed,  and  it  would  be  well  for  those  who 
are  not  aware  of  this  fact  to  catch  some  of  the  new  spirit  of 
things  if  they  really  wish  to  help. 

In  telling  recently  why  he  had  been  converted  to  Secretary 
McAdoo's  plan  for  an  American  Merchant  Marine,  Roger  W. 
Babson,  the  noted  economist  and  statistician,  said: 

"The  reason  that  England,  Germany  and  other  countries  have  used 
subsidy  to  such  advantage  is  that  they  were  alone  in  the  field.  Moreover, 
now  that  they  are  already  so  well  entrenched,  it  would  take  a  hundred 
million  dollars  and  a  generation  of  time  for  us  to  secure  a  footing  by 
their  methods.  As  fast  as  we  gave  a  subsidy  they  would  add  a  similar 
amount  to  their  present  subsidy,  and  they  would  continue  to  be  just  so 
much  ahead  of  us." 

Furthermore,  a  subsidy  is,  in  its  final  analysis,  a  tax  on  the 
many  for  the  benefit  of  an  exceeding  few,  is  bad  in  morals  and 

80 


A  Government  Controlled  Merchant  Marine 

in  influence  vicious.  I  refer,  of  course,  to  the  insidious  and 
powerful  lobby  which  would  inevitably  be  maintained  to  guar- 
antee its  permanency,  because  there  is  no  such  thing  as  a  per- 
manent policy  under  our  form  of  government;  what  one  party 
does  when  in  power  another  party  may  undo  when  it  takes  over 
the  reins.  Can  you  imagine  a  better  legislative  football,  a 
greater  source  of  graft  than  a  subsidy  would  be?  And  can 
you  imagine  any  party  selling  Uncle  Sam's  Naval  Auxiliary  Mer- 
chant Marine,  once  it  is  established,  unless  private  capital  shall 
have  done  that  which  those  who  hold  a  brief  for  it  have  so  long 
talked  of — built  ships  enough  to  carry  our  wares  to  every  port 
and  restore  to  the  United  States  the  glorious  preeminence  of  the 
days  of  the  clipper  ships,  days  when  the  names  of  the  father 
and  grandfather  of  our  good  friend,  Mr.  Bernard  N.  Baker, 
whose  interesting  address  we  have  just  listened  to,  were  spoken 
on  the  seven  seas? 

The  Present  Seamen's  Law  Not  Opposed  in  Congress 

Before  taking  up  more  reasons  for  the  creation  of  a  Govern- 
ment-controlled Merchant  Marine,  I  beg  to  devote  a  moment 
to  impressing  upon  you  the  utter  uselessness  of  trying  to  expand 
our  commerce,  of  trying  to  make  dollar  exchange  a  permanent 
reality,  in  any  other  way.  The  La  Follette  Seamen's  law  was 
passed  without  a  recorded  dissenting  vote  from  Republican  or 
Democrat  in  either  House  or  Senate.  It  is  true  that  an  effort 
was  subsequently  made  to  reconsider  the  action  taken  in  the  latter 
body,  but  it  was  futile.  The  platforms  of  both  political  parties 
contain  planks  recommending  the  passage  of  such  a  measure, 
and  the  man  whose  name  it  bears  is  not  of  the  Democratic  faith. 
These  are  facts  which  he  who  would  be  constructive  must 
consider. 

I  refrain  from  discussing  the  merits  of  the  LaFollette  law 
because  I  realize  that  there  is  much  hostility  to  it  in  the  business 
world  and  because  any  views  that  I  may  entertain  concerning 
it  are  not  important.  The  interpretation  of  the  provisions  of 
this  Act  recently  made  by  the  Attorney-General  assuaged,  in  a 
measure,  the  wrath  of  some  of  its  opponents,  and  Congress  may 
further  modify  it  a  little;  but  considered  largely,  it  is  here  to 
stay  because  Democrats  and  Republicans  in  convention  and  in 
Congress  assembled  have  interpreted  the  sentiment  of  the  people 
of  the  United  States  as  being  for  it. 

81 


Second  Session — Monday  Afternoon 


In  an  excellent  speech  outlining  the  Administration's  plan 
for  a  Naval  Auxiliary  Merchant  Marine,  delivered  at  Indian- 
apolis recently,  Secretary  McAdoo  said: 

"I  do  not  believe  that  the  standards  for  the  American  seaman  should 
be  lowered,  nor  do  I  believe  that  any  Congress  of  the  United  States 
will  ever  lower  them.  The  reason  I  believe  it  would  be  unwise  is  the 
question  of  humanity.  The  treatment  of  sailors  under  the  navigation 
laws  of  most  of  the  nations  of  the  earth,  so  far  as  I  have  been  able  to 
study  them,  has  always  made  me  wonder  why  as  many  men  choose  a  sea- 
faring life  as  do." 

And  in  this  connection  let  me  say  that  a  very  important 
phase  of  the  proposed  legislation  is  the  creation  of  an  American 
Naval  Reserve.  Mr.  McAdoo  has  well  contended  that  in  order 
to  get  the  right  kind  of  men  to  go  to  sea  their  welfare  and  man- 
hood must  be  safeguarded  by  law. 

The  Need  of  a  Naval  Auxiliary 

Gentlemen,  did  you  ever  ponder  seriously  how  urgent  is  the 
United  States'  need  of  a  Naval  Auxiliary?  All  of  you  recall  the 
splendid  cruise  around  the  world  made  by  our  men-of-war  in  1908. 
Probably  no  other  incident  of  our  time  has  done  more  to  excite 
our  pride  and  warm  the  cockles  of  our  patriotic  hearts  than  that 
cruise,  and  yet  those  splendid  men-of-war  were  coaled  from  ves- 
sels flying  practically  every  flag  of  the  world  except  the  Stars 
and  Stripes.  To  be  exact,  I  was  informed  at  the  Navy  Depart- 
ment a  few  days  ago  that  after  leaving  Rio  de  Janeiro  on  the 
way  around  Cape  Horn  and  up  to  San  Francisco,  not  a  dollar's 
worth  of  coal  was  furnished  by  an  American  vessel.  Yet,  just 
ten  years  before  that  Uncle  Sam  invested  eighteen  million  dol- 
lars in  a  lot  of  old  boats,  some  of  which  soon  went  to  the  junk 
heap,  and  called  them  a  Naval  Auxiliary.  At  the  same  time  he 
purchased  for  the  War  Department  army  transport  ships  cost- 
ing more  than  eight  million  dollars,  and  leased  others  whose 
rental  in  four  years'  time,  when  they  were  returned  to  their 
owners,  totaled  nearly  eighteen  million  dollars.  It  has  been  said 
that  President  Roosevelt  had  two  things  in  mind  when  he  sent 
that  fleet  around  the  world.  One  was  to  demonstrate  what  a 
powerful  Navy  the  United  States  possessed,  and  the  other  to 
impress  upon  the  American  people  themselves  the  fact  that  in 
time  of  war  that  fleet  would  be  practically  helpless  because  of 
a  lack  of  colliers.  I  don't  vouch  for  this  story  but  no  stretch 
of  the  imagination  is  required  to  believe  it. 

82 


A  Government  Controlled  Merchant  Marine 

Innumerable  difficulties  were  encountered  by  the  Paymasters 
in  securing  coal  and  provisions.  At  Melbourne,  Australia,  where 
coal  is  difficult  to  obtain  in  considerable  quantities  except  upon 
long  notice,  the  colliers  failed  utterly,  and  it  was  necessary  to 
exercise  great  ingenuity  to  get  coal,  even  though  at  a  price  much 
higher  than  market  quotations,  to  enable  the  fleet  to  proceed. 
My  authority  for  this  statement  is  the  report  of  the  senior  Pay- 
master on  that  cruise. 

Now  let  us  consider  what  happens  when  war  is  upon  us 
and  a  Naval  Auxiliary  has  to  be  secured  in  haste.  Of  the  one 
hundred  and  two  vessels  purchased  for  a  total  of  eighteen  mil- 
lion dollars,  the  Navy  Department  has  sold  twenty-five  since  the 
Spanish-American  War  for  the  insignificant  sum  of  $1,167,628. 
A  notable  example  of  absurd  depreciation  is  the  Zafiro,  bought 
for  $87,597  and  sold  for  $3,300  to  the  Chicago  Junk  Company; 
another  is  the  Yosemite,  bought  for  $575,000  and  sold  for  $11,- 
522;  and  still  another  is  the  Hornet,  bought  for  $117,500  and 
sold  for  $5,100.  The  army  transport  Terry  was  purchased 
December  12,  1898,  for  $150,000,  and  was  sold  on  August  5, 
1901  (in  use  less  than  three  years)  for  $19,600;  $145,000  was 
paid  for  the  Seward,  for  use  by  the  army  April  n,  1900,  and 
it  was  sold  in  1914  for  $5,325 ;  the  Sedgwick  was  bought  for  the 
army  for  $200,000  on  July  27,  1898,  and  was  sold  four  years  later 
for  $52,000.  In  brief,  within  four  years  after  the  outbreak  of 
the  war  with  Spain,  the  United  States  spent  approximately  $45,- 
000,000,  just  $5,000,000  less  than  the  Administration's  bill  will 
probably  call  for,  for  auxiliary  vessels  for  the  army  and  navy, 
and  we  all  know  that  what  remains  of  them  is  hardly  worth 
serious  mention. 

The'J'olitical^PartiesJNot^Far  Apart 

Not  only  is  the  need  of  an  adequate  Naval  Auxiliary  univer- 
sally conceded,  but  we  find  that  leaders  of  the  two  dominant  po- 
litical parties  are  really  not  so  far  apart  as  to  the  method  by  which 
it  should  be  secured.  As  recently  as  March  26,  1914,  Senator- 
Weeks,  of  Massachusetts,  who  conducted  the  filibuster  against 
the  Ship  Purchase  Bill  in  the  closing  days  of  the  Sixty-third  Con- 
gress, introduced  in  the  Senate  a  resolution  containing  the  fol- 
lowing preamble : 

"Whereas,  it  is  desirable  to  develop  and  extend  commercial  rela- 
tions between  the  United  States  and  the  countries  of  South  America 
by  the  establishment  of  direct  lines  of  communication  for  carrying  the 
United  States  mails,  for  the  transportation  of  passengers  and  freight  and 

83 


Second  Session — Monday  Afternoon 


.      S .     •          -    .  1  :-•  I  $ 

"Whereas,  private  capital  has  not  engaged  in  this  service  to  a  sufficient 
extent  to  furnish  facilities  comparable  to  those  enjoyed  by  the  people 
of  other  countries  having  trade  relations  with  South  America, 

"Therefore,  it  is  resolved  that  the  Secretary  of  the  Navy  be  authorized 
to  prepare  a  plan  for  the  operation  of  some  of  the  Navy  cruisers  between 
New  York  and  New  Orleans,  the  city  of  Valparaiso,  Chile,  and  inter- 
mediate points." 

Isn't  that  Government  ownership  of  a  merchant  marine?  If 
the  arguments  advanced  by  the  opponents  of  Mr.  McAdoo's 
plan  that  the  United  States  has  no  right  to  engage  in  business  in 
competition  with  private  capital  is  sound,  wouldn't  it  have  held  good 
also  had  Mr.  Weeks'  bill  become  law?  Republicans  and  Demo- 
crats so  understood  it  and  the  Weeks  bill  passed  the  Senate  with- 
out a  division,  but  when  the  House  so  amended  it  that  it  auth- 
orized the  Government  to  take  stock  in  a  shipping  corporation, 
just  as  the  Government  owns  the  stock  of  the  Panama  Railroad 
and  Steamship  Corporation,  the  Republican  Senators  faced  about 
and  killed  the  measure  in  most  vehement  fashion,  though  Senator 
Weeks  and  Senator  Gallinger  had  originally  urged  in  its  behalf  the 
fact  that  the  United  States  had  spent  four  hundred  million  dollars 
in  the  building  of  a  canal  and  had  no  steamers  prepared  to  un- 
dertake the  extension  of  our  foreign  trade.  .  The  difference  is 
that  Senator  Weeks'  measure  was  to  do  in  a  half-hearted  and  most 
inefficient  way  what  the  Democrats  in  Congress  proposed  and  are 
again  proposing  to  do  in  a  big  and  comprehensive  way. 

Results  of  Defeat  of  Shipping  Bill 

And  what  is  the  result  of  the  successful  fight  which  Mr. 
Weeks  and  his  associates  made  against  the  Shipping  Bill  in  the 
last  Congress?  A  dearth  of  vessels  to  carry  our  exports  to 
Europe,  and  an  even  more  serious  shortage  of  vessels  for  the 
Latin- American  and  Oriental  trade;  freight  rates  extortionate 
beyond  the  dreams  of  avarice,  and  our  own  railroad  terminals  at 
the  seaboard,  as  I  have  already  stated,  choked  almost  to  the  point 
of  paralysis  with  the  products  of  our  mills  and  our  farms. 
Eighteen  months  ago  the  rate  on  cotton  to  Mediterranean  ports 
was  from  eighteen  to  twenty  cents  per  hundred  pounds;  I  am 
informed  that  now  it  is  $1.50  per  hundred.  The  value  of  a 
barrel  of  lubricating  oil  is  about  $6;  the  rate  on  a  barrel  to 
Mediterranean  ports  eighteen  months  ago  was  seventy-five  cents  ; 
now  it  is  from  five  to  eight  dollars.  I  am  telling  you  business 
men  nothing  new  when  I  say  that  all  trans- Atlantic  freight  rates 
have  advanced  fully  500  per  cent.,  and  in  some  cases  have  gone 

84 


A  Government  Controlled  Merchant  Marine 

much  higher.  No  wonder  the  foreign  shipping  pool  squirms 
and  causes  its  marionettes  in  Yankee-land  to  do  a  war  dance  when 
the  news  breaks  that  a  government  controlled  merchant  marine 
for  Uncle  Sam  is  planned. 

We  talk  a  great  deal  about  dollar  exchange  and  the  fact 
that  the  apparent  balance  of  trade  is  now  more  than  $1,600,000,000 
in  our  favor,  but  we  pause  for  thought  when  we  look  at  the 
other  side  of  the  picture  and  consider  that  in  normal  times  we 
pay  to  the  owners  of  ships  flying  foreign  flags  approximately 
$300,000,000  a  year  for  carrying  freight,  practically  all  of  which 
should  be  hauled  in  American  bottoms.  We  seem  not  to  realize, 
when  we  pause  to  consider  the  future,  that  the  very  ships  for 
the  existence  and  maintenance  of  which  our  gold  is  responsible 
have  failed  us  miserably  when  we  needed  them  most,  and  that 
the  owners  of  those  remaining  in  the  trans-oceanic  service,  like  the 
robber  barons  of  old,  are  demanding  all  the  traffic  will  bear. 

Now,  once  more  as  to  the  needs  of  the  Navy  itself.  The 
Secretary  of  the  Navy  has  estimated  that  there  would  be  required 
in  time  of  war  four  hundred  merchant  vessels  for  auxiliaries, 
with  a  total  of  1,172,000  gross  tonnage.  In  addition,  should  our 
coast  be  invaded,  or  even  occasionally  visited,  we  would  need  at 
least  three  hundred  and  twenty-four  small  vessels  of  about  150 
gross  tons  each  for  mine  sweeping.  The  larger  vessels,  of  course, 
would  act  as  fleet  scouts,  colliers,  oilers,  supply  and  repair 
ships,  ammunition  supply  ships,  hospital  ships,  etc.  It  is  believed 
that  the  324  small  vessels  could  be  secured  from  our  coastwise 
craft,  but  from  the  entire  merchant  marine  of  the  United  States — 
and  it  is  probably  much  greater  today  than  it  will  be  when  this 
terrible  war  is  over — only  700,000  gross  tonnage  of  vessels  avail- 
able for  conversion  into  naval  auxiliaries  could  be  secured. 
Therefore,  we  would  have  to  look  elsewhere  for  at  least  500,000 
gross  tonnage.  Where  would  we  get  it?  A  few  days  ago  the 
Chamber  of  Commerce  of  the  United  States  issued  a  statement 
which,  in  part,  is  as  follows : 

"Our  merchant  marine  consists  of  337  steel  sailing  ships,  averaging 
1,600  tons,  544  wooden  sailing  vessels  averaging  600  tons,  239  wooden 
steamers,  averaging  300  tons,  and  331  steel  steamships,  averaging  3,800 
tons.  In  large  merchant  steamers,  the  class  that  is  fast  growing  in  com- 
merce, and  of  a  size  and  speed  to  render  some  assistance  as  naval 
auxiliaries,  the  United  States  stands  third,  surpassed  only  by  Great  Britian 
and  Germany,  but  a  glance  at  the  grand  totals  and  then  at  the  individual 
figures  for  each  country  revenls  a  startling  situation. 

"//  seems  that  60  per  cent,  of  the  big  and  able  steamers  of  the  world 
are  owned  by  Great  Britain  and  not  7  per  cent,  by  the  United  States. 

85 


Second  Session — Monday  Afternoon 


Here  lies  the  root  of  all  discouragement  as  to  our  merchant  marine. 
The  trade  and  wealth  of  the  United  States  have  at  their  disposal  only 
about  one-tenth  of  the  shipping  facilities  available  to  the  British  mer- 
chant and  manufacturer.  To  carry  the  bulk  of  our  sea-borne  commerce 
we  have  to  rely  on  the  ships  of  friendly  nations.  The  estimated  result 
is  that  every  year  three  hundred  million  dollars  leaves  the  United  States 
in  the  form  of  freight  payments  for  deposit  in  the  coffers  of  foreign 
ship  owners.  .  .  .  Americans  must  have  actual  commercial  sea-power 
in  proportion  to  their  trade." 

That,  gentlemen,  is  from  what  is  probably  the  foremost 
commercial  organization  of  the  world.  Such  a  thing  is  almost 
inconceivable,  but  suppose  to-morrow  we  were  to  go  to  war 
with  Great  Britain !  How  would  we  coal  our  fleet  ? 

Relation  of  Merchant  Marine  to  Dollar  Exchange 

A  great  boon  to  us  as  the  result  of  the  chaotic  conditions  in 
the  old  world  is  Dollar  Exchange.  We  have  it  so  far  as  floating 
credits  are  concerned  (and  each  succeeding  day  is  emphasizing  it), 
but  we  wouldn't  have  it  long  if  the  close  of  the  war  were  to 
find  us  without  definite  action  taken  to  secure  a  merchant  marine 
flying  the  American  flag  with  which  to  maintain  it.  It  is  estimated 
that,  in  spite  of  the  extraordinary  and  tremendous  demand  of 
the  belligerent  nations  for  credits  at  New  York,  approximately 
$5,000,000,000  of  gilt-edged  American  securities  are  still 
held  abroad.  To  offset  that  we  have  loaned  $900,000,000  to 
European  countries  and  to  Canada  since  the  war  began,  and  in 
that  period  other  nations  have  shipped  to  these  shores  something 
over  $325,000,000  in  gold.  When  peace  is  restored  an  enormous 
amount  of  money  will  be  required  for  the  rehabilitation  of 
Europe;  that  money  will  go  largely  from  the  United  States. 
This  means  that  we  will  become  interested  in  developments  of 
many  kinds,  that  by  so  doing  we  will  be  creating  new  markets 
for  our  products.  These  many  years  Europe  has  been  lending 
to  us  and  now  we  will  become  the  lender.  Our  great  national 
banks,  under  the  provisions  of  the  Federal  Reserve  Act,  the 
most  wonderful  piece  of  legislation  enacted  under  any  adminis- 
tration since  the  Civil  War,  are  establishing  branch  banks  in  the 
great  capitals  of  the  world  in  order  that  we  may  be  on  a  par 
in  this  respect  with  Great  Britain  and  Germany  and  France. 
Only  a  few  days  ago  American  financiers  formed  here  a  $50,000,- 
ooo  corporation  for  the  purpose  of  financing  beyond  our  borders 
great  undertakings,  many  of  which  are  held  in  abeyance  only  until 
hostilities  cease. 

86 


A  Government  Controlled  Merchant  Marine 

Would  those  who  oppose  the  establishment  of  an  American 
Merchant  Marine  on  theoretical  grounds  have  the  United  States 
stand  idly  by  and  allow  the  greatest  opportunity  of  all  time  to 
pass  from  her  ? 

Let  us  consider  for  a  moment  what  the  South  American 
trade  is  worth  ?  Great  Britain  and  Germany  have  $5,000,000,000 
invested  in  that  continent.  The  latest  figures  show  the  total 
imports  of  South  America  from  the  countries  of  Europe  were 
$677,767,815  in  the  year  preceding  this  war,  and  that  the  United 
States  furnished  only  a  little  more  than  $165,000,000.  Much  of 
this  trade  would  be  ours  if  we  were  only  to  go  after  it  in  a 
practical  and  effective  way. 

For  example,  Brazil,  in  time  of  peace,  buys  $17,000,000  worth 
of  coal  from  England  each  year  and  only  $2,000,000  worth  from 
America;  England  sells  Argentine  $25,000,000  worth  of  coal 
annually  and  America  only  $1,000,000  worth.  England  can  no 
longer  supply  that  market,  but  our  New  River  and  Pocahontas 
coals  can  take  the  place  of  the  Welsh  coals  because  these 
coals  can  match  the  Cardiff  coal  in  low  sulphur  and  ash,  and  can 
meet  its  highest  heat  values.  But  the  rates  which  foreign  ship- 
owners charge  for  hauling  coal  from  these  shores  to  South 
American  countries  are  prohibitive;  so  we  must  let  that  oppor- 
tunity pass. 

A  Merchant  Marine  Needed  to  Regulate  Rates 

Take  Russia:  She  imported  nearly  $600,000,000  of  foods 
and  manufactured  articles  annually  under  the  provisions  of  a 
favorable  treaty.  Germany  supplied  $300,000,000  of  this  amount, 
and  the  United  States  only  about  $45,000,000.  Of  course  the 
treaty  died  when  hostilities  began.  Our  trade  with  Russia  in 
the  past  fiscal  year  showed  a  marked  increase  over  that  for  1914, 
but  when  the  head  of  the  Bureau  of  Foreign  and  Domestic  Com- 
merce of  Washington  tells  us  that  Russia's  purchasing  power 
is  three  and  one-half  times  that  of  South  America,  and  that  in- 
dustrially she  is  where  the  United  States  was  more  than  fifty 
years  ago,  we  have  food  for  thought.  We  are  bound  to  be  tre- 
mendously impressed  with  the  fact  that  if  we  propose  to  invest 
money  in  and  sell  goods  to  Russia,  South  America,  Australia,  or 
where-not,  we  must  have  an  adequate  merchant  marine  because 
it  would  be  dangerous  to  have  our  commerce  at  the  mercy  of 
another  nation  should  war  ever  occur  again  upon  the  earth — and 

87 


Second  Session — Monday  Afternoon 


doubly  would  this  be  true  if  we  were  a  belligerent.  Furthermore, 
we  must  have  a  merchant  marine  in  order  that  our  ships  may 
do  for  American  commerce  what  the  ships  of  Great  Britain, 
Germany  and  France  do  for  the  commerce  of  their  countries — 
transport  our  goods  to  the  seaports  of  the  world  always  at 
reasonable  rates. 

Mr.  Roger  W.  Babson  said  recently  in  this  connection: 

"I  am  in  favor  of  Government  owned  ships  because  I  believe  that 
it  is  the  only  arrangement  which  will  enable  us  to  break  up  the  steam- 
ship pool  which  at  present  has  our  manufacturers  in  its  grip.  No 
private  corporation,  with  or  without  subsidy,  could  resist  the  temptation  to 
become  part  of  this  pool,  which  is  controlled  abroad  and  whose  rates 
are  beyond  the  regulating  power  of  our  laws.  But  government  owned 
ships  could  no  more  join  the  pool  than  the  Post  Office  Department 
could  make  a  deal  with  the  express  companies  to  hold  up  the  people. 

"No  private  shipping  corporation  could  break  up  these  pools ;  it  would 
cost  too  much  money  and  the  stockholders  wouldn't  stand  for  it.  These 
pools  can  be  broken  up  only  by  government  owned  ships  not  responsible 
to  stockholders." 

Secretary  Redfield,  admittedly  the  most  practical  man  that 
has  yet  been  at  the  head  of  the  Department  of  Commerce,  stated 
recently  that  our  factories,  running  seven  months  in  the  year, 
could  supply  all  of  our  domestic  requirements.  It  is,  therefore, 
obvious  that  if  we  propose  to  furnish  employment  the  year  round 
for  labor,  and  realize  fully  the  possibilities  of  our  great  manu- 
facturing units  we  must  go  beyond  our  borders  both  with  our 
capital  and  with  our  goods. 

I  am  only  trite  when  I  say  to  you  gentlemen  that  a  desirable 
debtor  produces  trade  so  surely  as  the  day  follows  the  night, 
and  that  in  foreign  lands  we  must  create  that  debtor  and  then 
cultivate  him. 

I  beg  to  assure  you  that  if  the  proposed  legislation  is 
enacted,  it  is  not  the  intention  to  maintain  regular  steamship 
lines  where  sufficient  and  satisfactory  service  has  been  established 
by  American  companies  operating  ships  under  American  registry. 
Ordinary  cargo  ships  could  be  used  in  any  or  all  parts  of  the 
world  for  the  benefit  of  the  commerce  of  this  country. 

A  Shipping  Board  to  be  Created 

Among  other  things,  the  bill  which  is  being  prepared  by 
Secretary  McAdoo  and  will  be  introduced  as  an  administration 
measure,  is  expected  to  provide  for  the  creation  of  a  shipping 
board,  to  be  composed  of  the  Secretary  of  the  Navy  and  the  Sec- 
retary of  Commerce,  as  members  ex-officio,  and  three  members 

88 


A  Government  Controlled  Merchant  Marine 

to  be  nominated  by  the  President  and  confirmed  by  the  Senate ; 
for  the  sale  of  $50,000,000  of  Panama  Canal  bonds,  in  order  that 
a  fund  may  be  created  to  be  put  in  the  hands  of  this  board ;  the 
board  would  have  authority  to  establish,  as  soon  as  practicable, 
steamships  lines  to  the  east  and  west  coasts  of  South  America 
and  to  the  Orient;  it  would  have  authority  to  organize  a  cor- 
poration and  to  subscribe  to  the  capital  stock  thereof  in  whole  or 
in  part,  the  board  to  vote  the  stock  belonging  to  the  United  States 
for  the  election  of  directors ;  these  directors,  in  turn,  would  choose 
the  officers  and  employees  of  the  corporation;  the  corporation 
could  sue  and  be  sued,  and  thereby  the  necessity  of  securing  an 
Act  of  Congress  before  payment  of  a  judgment  rendered  by  the 
Court  of  Claims  would  be  avoided;  the  shipping  board  would 
have  the  power  to  lease  or  charter  cargo  ships  to  responsible 
individuals,  firms  or  corporations  under  such  conditions  as  the 
board  might  deem  best;  the  board  would  have  power  to  reform 
our  navigation  rules  and  regulations,  to  settle  shipping  problems 
and  recommend  to  Congress  the  necessary  legislation  to  en- 
courage and  develop  a  great  merchant  marine  under  the  Ameri- 
can flag;  the  board,  acting  in  conjunction  with  the  Interstate 
Commerce  Commission,  would  be  authorized  to  arrange  through 
bills  of  lading  between  our  railroad  lines  and  steamship  lines 
operating  under  the  American  flag  in  foreign  trade,  and  to  provide 
the  means  whereby  special  through  rates  could  be  made  between 
our  railroads  and  steamship  lines  to  enable  them  to  meet  the  com- 
petition of  foreign  carriers  in  the  open  markets  of  the  world. 

Be  not  deceived.  Those  who  strenuously  oppose  the  creation 
of  a  Naval  Auxiliary  Merchant  Marine  at  this  time  are  battling  for 
subsidies.  And  I  say  to  you  that  so  long  as  Woodrow  Wilson  and 
the  Democratic  party  are  in  power  at  Washington  subsidies  are  to 
have  no  quarter.  Also,  you  should  weigh  carefully  the  fact  that 
those  of  the  other  great  political  party  who  now  cry  that  capital 
should  be  given  the  right  to  build  an  American  Merchant  Marine 
denied  capital  that  right  when  they  held  sway  in  Washington. 

Fate  has  decreed  that  ours  shall  be  the  premier  financial  and 
commercial  country  of  the  world.  Are  we  to  battle  with  fate,  or 
are  we  to  do  what  we  can  to  achieve  our  destiny? 


MR.  BAKER:  My  attention  has  been  called  by  a  friend  to 
the  fact  that  I  spoke  of  the  absolute  absence  of  the  American 
flag  on  the  Pacific  Ocean.  I  understand  that  I  did  not  say  "in 

89 


Second  Session — Monday  Afternoon 


the  foreign  trade,"  but  I  hope  you  all  understand  that.    There  are 
plenty  of  flags  there  in  our  domestic  trade. 


THE  CHAIRMAN:  Gentlemen,  our  next  speaker  on  the  sub- 
ject which  is  on  the  program  is  the  Honorable  William  H. 
Douglas,  of  New  York  City. 

Mr.  Douglas  has  been  familiar  with  matters  of  transporta- 
tion as  between  this  and  foreign  countries  for  a  great  many 
years,  and  is  a  man  of  much  experience  and  was  formerly  a 
member  of  our  national  House  of  Representatives. 

I  have  the  pleasure  of  introducing  to  you  Mr.  Douglas. 
(Applause.) 

The   Present  Status  of  the  American  Merchant 
Marine  and  Pending  Legislation 

By  HON.  WILLIAM  H.  DOUGLAS 

President  of  Arkell  &  Douglas,  Inc.,  New  York 

MR.  DOUGLAS  :  Mr.  Chairman  and  gentlemen :  I  am  very  glad 
to  be  with  you  today  to  listen  to  discussions  on  the  great  inter- 
national questions  which  affect  this  country,  but  specially  am 
I  pleased  to  have  an  opportunity  to  say  a  few  words  on  what  I 
consider,  with  the  one  exception  of  the  question  of  preparedness 
in  case  of  war,  to  be  the  greatest  international  question  of  all, 
the  establishment  of  an  American  merchant  marine.  We  should 
prepare;  we  need  an  enlarged  army  and  navy  to  protect  the 
honor  and  dignity  of  this  country,  which  has  not  been  protected 
during  the  last  twelve  months.  (Applause.)  We  need  these 
precautions  to  also  protect  the  women  and  the  children  of  our 
country,  and  the  homes  we  have  built  up. 

These  two  great  questions,  gentlemen,  go  hand  in  hand.  We 
are  justified  and  right  in  endeavoring  by  peaceful  means  to  con- 
quer the  nations  of  the  world  commercially,  and  while  we  do 
not  wish  a  navy  to  conquer  the  world,  we  at  least  desire  a  navy 
to  keep  the  world  from  conquering  us.  (Applause.) 

The  business  men  of  our  country  interested  in  the  growth 
and  expansion  of  our  foreign  commerce  have  watched  with  satis- 
faction its  enormous  development,  and  today  they  may  pride 
themselves  upon  enjoying  the  largest  export  and  import  trade  of 
any  country  in  the  world. 

On  the  other  hand,  however,  they  have  been  amazed  and 
keenly  disappointed  at  the  folly  and  indifference  of  our  Govern- 

90 


The  Merchant  Marine  and  Pending  Legislation 

ment  and  Congress  in  failing  to  safeguard  adequately  this  busi- 
ness, so  essential  to  our  welfare,  by  also  building  up  through  wise 
legislation  an  adequate  American  merchant  marine  to  transport 
our  goods  to  the  world's  markets. 

The  theory  advanced  by  some  that  we  can  profitably  employ 
others  to  do  our  carrying  is  absurd,  and  the  fallacy  of  these 
arguments  has  been  so  clearly  shown  by  the  disastrous  experience 
we  are  now  forced  to  face,  owing  to  war  conditions  and  our  lack 
of  shipping,  that  it  is  to  be  trusted  we  shall  hear  no  more  of  such 
opinions. 

We  cannot  comfort  ourselves  with  the  excuse  that  present 
conditions  were  not  anticipated,  as  they  were  clearly  foretold 
and  discussed  by  our  citizens  and  our  public  men,  and  were  de- 
bated in  the  Halls  of  Congress  during  many  years  past.  War  in 
Europe  was  a  foregone  conclusion — sure  to  come — and  the  only 
uncertainty  was  when  would  it  break  out. 

The  shipping  question  must  now  be  settled,  and  satisfactorily 
to  the  American  people,  as  it  seriously  affects  the  welfare  of 
all  classes,  the  laborer,  the  farmer,  the  manufacturer,  the  pro- 
ducer of  raw  material,  the  merchant  and  the  exporter. 

No  important  foreign  nation  would  tolerate  the  absolute  mo- 
nopoly of  its  ports,  and  the  establishment  of  mail  and  freight 
lines  flying  foreign  flags,  carrying  95  per  cent,  of  its  products, 
reaping  enormous  freight  profits  and  usurping  its  people's  rights, 
without  protest.  It  would  quickly  adopt  legislation  to  change 
so  humiliating  a  position.  Yet  this  is  our  status  to-day,  and  we  are 
still  hesitating  as  to  what  action  is  essential,  after  debating  the 
question  for  a  quarter  of  a  century. 

,  Under  government  paternalism  these  foreign  vessels  are 
subject  to  call,  and  should  we  have  any  serious  trouble  with  those 
who  dominate  the  carrying  trade  of  the  world,  few  vessels  would 
be  left  for  hire,  and  without  a  fleet  of  our  own  our  products, 
even  after  reaching  the  seaport,  could  not  be  sent  abroad,  and, 
our  losses  would  be,  in  a  few  months,  a  hundred  times  greater 
than  the  cost  of  rehabilitating  our  maritime  position. 

Even  without  our  nation  being  embroiled  in  the  war,  had  those 
engaged  in  the  present  struggle  been  about  equal  in  naval  strength, 
so  that  tonnage  would  not  have  been  available,  instead  of  having 
handled  the  enormous  trade  which  has  come  to  our  country,  we 
should  have  been  most  seriously  handicapped.  Fortunately  for  us, 
one  nation  was  able  to  command  the  seas,  and  it  also  had  the 
mercantile  vessels  to  handle  our  exports,  so  that  we  have  not 

91 


Second  Session — Monday  Afternoon 


seriously  suffered.  The  danger,  however,  of  any  one  power 
practically  having  supreme  control  of  the  waterways  of  the 
world  must  have  been  impressed  on  the  mind  of  every  student 
of  international  affairs. 

Handicaps  of  American  Shippers 

Iii  addressing  this  audience  of  manufacturers,  merchants 
and  exporters,  it  is  not  necessary  to  take  up  in  detail  the  many 
reasons  why  we  should  no  longer  delay  the  building  up  of  a 
maritime  fleet.  The  story  has  been  often  told  and  is  now  well 
known  to  all. 

You  are  thoroughly  posted  in  reference  to  the  excessive  rates 
we  have  had  to  pay  for  many  years,  and  as  to  the  millions  which 
should  have  gone  to  our  own  people  annually  contributed  in 
profits  to  others.  It  is  also  well  known  how  we  have  suffered 
from  rate  discrimination,  lack  of  regular  shipping  facilities,  slow 
tramp  steamers  used  by  alien  lines  to  carry  our  freight  when 
vessels  of  greater  speed  were  employed  at  their  home  ports. 

There  has  been  no  protection  in  the  payment  of  just  claims, 
prepayment  of  freight  has  been  forced  upon  us  without  justifica- 
tion, and  our  merchants  have  often  for  long  periods  been  unable 
to  secure  tonnage  for  full  cargo  requirements,  resulting  in  heavy 
loss  of  business. 

The  agents  of  alien  lines  running  from  our  ports  have  had 
little  or  no  authority,  and  are  obliged  to  cable  to  their  home 
offices  in  Europe  to  secure  rates  when  desired.  Uniformity  of 
rates  has  been  denied  us,  our  large  corporations  securing 
monopoly  of  room  and  excluding  others,  or  by  contract  obtain 
preferential  rates  to  the  serious  detriment  of  the  smaller  shipper. 

The  attempted  effort  to  give  the  impression  that  our  ship- 
ments to  other  countries  are  on  a  basis  of  equality  with  the  rates 
charged  to  the  same  countries  when  similar  goods  are  shipped 
from  Europe  cannot  be  substantiated.  The  foreign  lines  without 
exception  are  in  combination  to  prevent  competition,  sailings  are 
arranged  and  uniform  rates  agreed  on.  In  view  of  all  these 
disadvantages,  it  is  surprising  that  we  have  been  able  to  accom- 
plish the  splendid  showing  we  have  as  exporters. 

Our  Present  Commercial  Situation  Dangerous 

Our  present  commercial  situation  is  dangerous  and  a  con- 
tinuation of  the  war  for  any  great  length  of  time  may  jeopardize, 
for  a  period  at  least,  much  that  we  have  gained  in  the  world's 

92 


The  Merchant  Marine  and  Pending  Legislation 

markets.  Freights  today  are  congested  and  there  is  serious  lack 
of  facilities  for  shipments  to  Australia,  New  Zealand,  South 
Africa,  South  America,  China,  Japan,  and  the  East  generally. 
It  is  impossible  to  make  any  contract  ahead,  and  rates  have  been 
increased  to  an  extent  which  is  almost  prohibitive.  Merchandise 
on  which  the  rate  was  $5  a  ton  fifteen  months  ago  can  now  be 
shipped  only  on  a  basis  of  $25  to  $30  a  ton,  and  shippers  are  told 
that  still  higher  figures  are  likely  to  prevail.  The  cost  of  carry- 
ing cargo  by  these  vessels  is  only  slightly  enhanced  by  reason 
of  war  conditions,  and  the  owners  are  making  three  and  four 
times  the  cost  of  the  ship  in  two  or  three  voyages.  It  is  esti- 
mated that  the  profit  to  English  steamship  owners  since  the  war 
began  will  amount  to  over  one  thousand  millions  of  dollars. 

All  this  is  a  sad  condition  for  us  to  face  when  we  look  back 
and  realize  that  an  expenditure  of  $5,000,000  or  $6,000,000  a 
year  for  the  last  ten  or  fifteen  years  would  have  established  a 
dozen  American  lines  to  the  world's  markets  and  have  given  us 
a  splendid  fleet,  saving  our  people  hundreds  of  millions  in  freights 
and  the  avoidance  of  many  of  the  hardships  we  are  now  obliged 
to  submit  to. 

The  government  missed  a  great  opportunity  when  the  war 
broke  out,  or  as  soon  thereafter  as  possible,  in  not  enacting  a 
temporary  war  measure  based  on  the  necessities  which  could  be 
clearly  seen  ahead.  The  people  of  this  country  would  not  have 
found  fault  or  begrudged  the  immediate  appropriation  of  $50,- 
000,000  or  $60,000,000  for  the  purchase  or  hire  of  vessels  to  aid 
our  commerce.  A  year  ago  such  an  expenditure  would  have 
been  of  untold  value  to  us.  The  steamers  secured  could  have 
been  operated  in  various  directions,  based  on  the  most  urgent 
necessities  at  the  time,  at  rates  which  would  have  been  sufficient 
to  cover  actual  cost  of  operation,  and  even  if  the  final 
result  should  have  been  a  loss  for  the  government,  so  great 
would  have  been  the  benefit  to  our  commerce  that  the  sum  ex- 
pended for  its  protection  would  have  unquestionably  received  the 
endorsement  and  approval  of  the  United  States. 

What,  however,  did  they  do  ?  In  some  garden  the  rank  seed 
of  permanent  operation  by  the  Government  of  American  mer- 
chant ships  was  planted,  and  they  would  not  listen  to  the  mer- 
chants, or  men  of  experience.  They  stated,  instead,  we  will 
go  to  Congress  and  we  will  secure  an  appropriation  of  many  mil- 
lions to  be  used  by  a  shipping  board  for  the  purchase,  building  or 
leasing  of  vessels,  and  we  will  operate  these  ships  in  the  deep 

93 


Second  Session — Monday  Afternoon 


sea  business  as  it  may  suit  us,  and  establish  foreign  lines  which 
the  American  merchants  have  not  had  the  enterprise  to  do. 

Now,  gentlemen,  I  wish  to  say  right  here  that  the  men  who 
made  these  statements  should  have  known  their  facts.  It  was 
not  a  fair  statement.  How  can  you  pass  law  after  law  knowing 
that  you  are  deliberately  preventing  the  initiative  and  the  ability 
of  the  American  merchant  to  place  ships  on  the  ocean  on  an 
equality  with  the  fostered  care  of  Europe,  and  then  turn  round 
and  accuse  them  of  not  taking  advantage  of  their  opportunities, 
when  you  know  full  well,  and  the  Government  knew  full  well, 
and  those  who  assailed  the  merchant,  that  our  people  could  not, 
by  reason  of  the  conditions  which  the  Government  had  forced 
upon  them,  carry  out  policies  which  the  Government  now  claim 
they  must  do  to  protect  our  people. 

No  wonder  that  those  interested  in  shipping  took  exception 
to  the  situation,  defended  themselves,  opposed  the  bill,  and  pro- 
tested that  the  right  to  fly  the  American  flag  on  the  ocean  should 
not  be  taken  away  from  them.  The  bill,  however,  was  put 
through  the  House  by  the  force  and  determination  of  the  Ad- 
ministration. Did  the  men  in  Congress  want  the  bill?  There 
is  not  a  man  here  who  knows  anything  about  the  workings  of 
Congress  last  winter  but  will  frankly  admit  they  did  not. 

Who  was  the  father  of  that  bill?  No  one  appears  to  know. 
It  was  impossible  to  find  out. 

Secretary  McAdoo  was  most  prominent  in  advocacy  of  the 
measure,  but  I  believe  that  even  he  did  not  say  that  it  was  his 
measure.  I  understand  that  President  Wilson  stated  that  it  was 
not  his  bill,  although  he  was  in  favor  of  its  passage.  The  mem- 
bers of  the  House  and  the  members  of  the  Senate  and  the  lead- 
ers of  both  branches  who  had  the  measure  in  charge  endorsed 
the  bill,  but  they  did  not  claim  that  they  were  the  writers  of  the 
measure.  Therefore,  I  have  no  hesitancy  in  saying,  gentlemen, 
that  the  origin  of  last  year's  bill  was  somewhat  obscure,  but 
we  do  know  it  had  the  support  of  the  Administration,  and 
we  are  further  advised  that  it  is  now  proposed  to  introduce 
another  bill  along  the  same  lines  against  the  wishes  of  the 
American  people. 

MR.  WOOLLEY:  Mr.  McAdoo  does  father  that  bill,  and  is 
proud  of  it.  (Applause.) 

MR.  DOUGLAS:  I  do  not  think  that  Mr.  McAdoo  did  more 
than  state  he  strongly  advocated  the  bill. 

94 


The  Merchant  Marine  and  Pending  Legislation 

MR.  WOOLLEY:  I  came  here  as  the  representative  of  Mr. 
McAdoo,  and  I  have  been  with  him  when  he  was  working  on  the 
bill.  He  is  very  proud  of  it. 

MR.  DOUGLAS  :  I  refer  to  the  bill  introduced  last  winter. 

MR.  WOOLLEY  :  I  am  speaking  of  the  present  bill. 

MR.  DOUGLAS  :  I  will  speak  of  the  present  bill  shortly. 

MR.  WOOLLEY  :  All  right,  sir. 

MR.  DOUGLAS  :  If  you  know  what  the  present  bill  is,  I  do  not, 
but  I  hope  I  can  make  some  suggestions  which  will  be  listened 
to  by  Mr.  McAdoo.  Please  understand  I  am  not  desirous  of 
being  unfair  to  this  gentleman.  In  fact,  I  propose  to  praise  him 
before  I  get  through. 

MR.  WOOLLEY  :  I  just  want  to  set  you  right.  I  do  not  care 
to  get  into  any  controversy  in  the  matter.  I  simply  want  to  set 
you  right  as  you  go  along. 

MR.  DOUGLAS:  I  now  understand  from  you  he  fathers  the 
present  bill.  He  did  not  last  year,  I  understand.  He  was,  how- 
ever, in  favor  of  the  bill  and  worked  for  it. 

I  wish  to  say  I  have  great  respect  for  Secretary  McAdoo, 
even  if  I  do  not  respect  his  judgment  on  this  bill,  because  he  is 
straightforward.  He  has  stated  he  wanted  an  American  merchant 
marine,  and  he  has  had  the  courage  of  his  convictions.  He  has 
traveled  in  the  West  and  to  other  sections  of  the  country,  and 
he  has  informed  the  people  that  we  need  a  merchant  fleet — that 
he  hopes  to  give  it  to  us — and  in  view  of  these  facts  he  has  ren- 
dered us  a  great  service  by  exploiting  this  great  question  for  the 
enlightenment  of  the  American  people,  and  he  has  made  the 
people  think.  I  am  further  going  to  show  later  where  I  stand 
with  the  Secretary,  because  I  hope  he  has  learnt  from  me,  as  I 
have  from  him.  (Laughter.)  I  am  willing  to  give  him  full 
credit. 

It  is  sad  to  look  back,  however,  and  think  that  many  bills 
have  been  introduced  in  Congress,  any  one  of  which  would  have 
placed  us  in  an  entirely  different  position  from  that  we  occupy 
today,  but  they  have  been  invariably  turned  down. 

I  hope  my  friend  representing  the  Government  (Mr.  Wool- 
ley)  will  not  think  in  saying  this  I  am  assailing  the  Democratic 
Party;  because,  gentlemen,  this  position  is  largely  due,  if  not 
entirely,  to  the  Republican  Party.  (Laughter  and  applause.) 

The  Democratic  Party  at  least  have  tried  to  do  something 
since  they  have  been  in  power,  even  if  they  have  not  done  it 
wisely.  (Laughter.)  But  the  Republican  Party,  claiming  to 

95 


Second  Session — Monday  Afternoon 


speak  for  the  wisdom  of  the  nation  and  notwithstanding  their 
many  years  of  experience  in  service,  never  lifted  a  ringer  to  carry 
through  to  completion  any  beneficial  legislation. 

It  was  computed  in  the  year  1904  by  the  Speaker,  that  five 
or  six  millions  of  dollars  would  have  established  one  or  two  lines 
to  South  America,  Central  America,  India,  China,  Japan,  Aus- 
tralia, New  Zealand  and  South  Africa — also  a  line  to  the  Philip- 
pine Islands,  stopping  at  the  Hawaiian  Islands  in  transit.  I  intro- 
duced a  bill  at  that  time  covering  the  establishment  of  lines  as 
named,  authorizing  the  steamers  to  be  partly  bought  abroad  if  de- 
sired to  obtain  promptly  the  tonnage  necessary,  but  one  quarter 
of  said  vessels  had  to  be  built  in  the  United  States  in  the  first 
five  years,  and  half  within  ten  years,  and  thereafter  all  to  be  of 
United  States  build. 

The  bill  provided  that  these  ships  should  be  built  under 
supervision  of  an  officer  of  the  Navy,  so  as  to  be  available,  as 
far  as  possible,  for  cruisers,  transports,  colliers,  etc.,  and  no  ves- 
sel not  acceptable  to  the  Secretary  of  the  Navy  to  be  employed 
under  the  contract. 

A  yearly  bond  was  to  be  taken  for  the  faithful  performance 
of  the  duties  entered  into  by  the  contractors.  That  the  steam- 
ships should  be  officered  by  citizens  of  the  United  States  and  at 
least  one  quarter  of  the  crew  should  be  United  States  citizens 
for  the  first  three  years,  one  third  after  the  first  three  years, 
and  half  thereafter,  were  also  required. 

It  further  provided  that  one  apprentice  should  be  taken  for 
each  one  thousand  tons  gross  register,  to  be  educated  in  the  duties 
of  seamanship  and  to  receive  pay,  and  to  rank  as  a  petty  officer. 

The  speed  of  vessels  for  each  line  was  to  be  at  the  discretion 
of  the  Postmaster-General,  the  object  of  this  clause  being  to  put 
on  vessels  which  could  compete  properly  with  alien  vessels 
running  in  similar  directions. 

It  safeguarded  the  ownership  of  the  line  absolutely  to  Amer- 
ican citizens. 

The  bill  further  gave  the  Secretary  of  Commerce  and  Labor 
supervision  and  right  of  consultation  as  to  freight  and  passenger 
rates  and  stipulated  that  no  shipper  should  be  discriminated 
against  in  rates  of  freight  or  by  any  system  of  private  rebates 
or  other  concessions  made  at  date  of  shipment,  or  later  period, 
to  a  shipper  or  consignee,  and  that  no  monopoly  of  freight  room 
of  any  one  article  or  articles  should  be  given  to  any  shipper  or 

96 


The  Merchant  Marine  and  Pending  Legislation 

shippers.  Further,  no  contractor  or  contractors  should  enter  into 
combination  with  any  other  parties  or  lines  running  steamers  to 
the  same  port  or  ports  provided  for  by  the  contract.  These  last 
named  provisions,  protecting  the  interests  of  the  shippers  of  the 
United  States,  were  then  for  the  first  time  introduced  into  a 
shipping  bill  presented  to  Congress.  We  now  find  twelve  years 
later  that  such  provisions  are  being  generally  accepted  and  have 
the  endorsement  of  the  Administration  today. 

This  illustration  I  give  to  show  the  slowness  of  Congress. 
Had  that  bill  passed  the  cost  would  have  been  less  than  seventy 
millions  of  dollars  between  then  and  now.  How  many  millions 
it  would  have  saved  us  cannot  be  determined,  but  it  would  have 
given  us  protection  for  ten  to  twelve  years  to  a  fair  degree, 
safeguarding  our  rates.  As  these  lines  would  have  increased 
in  importance  yearly  we  should  have  had  during  the  present  war 
a  large  number  of  secured  mail  lines  under  contract,  with  super- 
vision of  rates  by  a  government  department,  and  ten  times  the 
total  government  outlay  would  have  been  saved  the  public  of  the 
United  States  during  the  past  fifteen  months.  Furthermore,  the 
vessels  would  have  been  always  at  the  disposal  of  the  govern- 
ment along  the  lines  now  so  heartily  endorsed  by  everybody  in 
connection  with  building  up  our  maritime  power. 

The  Republican  Party  was  then  in  power.  I  was  a  Repub- 
lican. I  could  not  get  that  bill  even  considered  by  the  committee 
of  the  House  of  Representatives,  or  considered  by  the  members 
of  the  House,  and  like  many  other  bills,  and  good  ones,  intro- 
duced at  that  time  it  died  a  natural  death. 

I  will  now  take  up  issues  brought  out  by  Secretary  McAdoo 
in  his  Indianapolis  speech  delivered  on  the  I3th  of  October. 

The  first  thing  that  I  would  criticise  is  the  bill's  title,  and  I 
am  doing  so  entirely  in  a  friendly  way,  as  my  interviews  with  the 
Secretary  have  always  been  pleasant,  and  I  know  he  wants  to 
do  what  is  right,  and  further  I  believe  if  he  is  only  guided  right 
he  will  do  what  is  right.  The  bill  is  called  "A  Naval  Auxiliary 
Merchant  Marine."  This  is  an  unfortunate  start.  We  do  not 
want  a  naval  auxiliary  merchant  marine.  We  want  a  merchant 
marine,  built  for  the  commercial  requirements  of  the  country, 
and  for  our  foreign  trade,  and  then  we  want  this  merchant  ma- 
rine to  be  used  as  an  auxiliary  to  the  navy.  It  appears  the  ques- 
tion is  being  approached  from  the  wrong  angle.  The  Secretary 
seems  to  consider  the  navy  and  army  requirements  as  most  im- 

97 


Second  Session — Monday  Afternoon 


portant,  but  you  cannot  build  up  a  merchant  marine  from  that 
angle,  gentlemen.  (Applause.) 

In  a  few  words  I  will  tell  you  why.  It  is  proposed  to  put 
on  steamers  to  South  America.  I  wrote  to  Washington  to  try 
and  obtain  a  list  of  the  vessels  which  were  required  to  make  up 
the  500,000  gross  tonnage  essential  for  navy  purposes,  but  I  have 
not  yet  been  able  to  get  it.  It  was  a  list  made  out  by  the  Navy 
Department,  and  I  understand  embraces  a  large  number  of  differ- 
ent classes  of  steamers. 

Now,  the  Government  does  not  know  what  it  is  running  up 
against.  Let  us  take  just  one  illustration.  Vessels  to  South  Amer- 
ica going  to  the  Argentine  are  of  a  speed  which  will  not  aver- 
age more  than  about  ten  knots  an  hour.  I  would  like  to  have 
twenty  knot  boats,  but  I  must  speak  of  the  facts.  There  are  some 
vessels  which  will  go  eleven  to  twelve,  or  even  thirteen  knots, 
as  a  maximum,  but  this  is  not  twenty  knots,  and  such  speed  will 
not  be  attained  on  commercial  vessels  for  many  years. 

These  ships  are  built  specially  for  business  requirements, 
that  is,  they  are  of  large  carrying  capacity,  the  consumption  of 
coal  is  economized,  and  the  vessels  can  carry,  if  required,  large 
deck  loads.  Of  course,  I  am  guessing  more  or  less  about  the  kind 
of  ships  the  Government  would  build  for  these  lines,  but  if  it 
is  entirely  and  solely  based  on  navy  requirements,  they  will  not 
put  the  proper  class  of  ships  on  the  berth,  and  in  handling  them 
they  will  lose  large  amounts  of  money. 

One  of  these  immense  tramp  steamers  loading  against  a 
steamer  that  would  steam  sixteen  or  say  eighteen  knots  with  small 
carrying  capacity,  which  vessel  could  only  be  handled  at  almost 
double  the  cost  of  operation,  will  not  create  and  build  up  Amer- 
ican merchant  lines  to  that  country.  Such  vessels  will  simply 
perpetuate  the  control  of  the  alien  steamship  on  that  route  or 
any  other  route.  (Applause.) 

There  is  no  question  about  that,  gentlemen,  and  you  will 
have  to  face  it. 

Of  course  with  the  unlimited  power  of  the  Government  in 
a  moneyed  way,  and  money  counts,  they  can  do  anything,  but 
what  is  one  line  worth  to  South  America,  even  if  we  load  to  the 
West  Coast  and  also  to  the  East  Coast?  Such  lines  would  not 
carry  one-tenth  of  the  commerce  of  the  United  States  going 
to  South  American  ports.  Are  we  going  to  leave  85  to  90  per 
cent,  of  this  great  commerce  in  the  hands  of  aliens,  and  let 
them  make  the  enormous  profits  they  would?  Do  you  think 


The  Merchant  Marine  and  Pending  Legislation 

they  fear  the  Government  opposition  as  the  Government  scheme 
is  laid  down  today  in  the  present  bill  ? 

Let  me  tell  you  that  the  alien  steamship  people  are  not 
afraid  of  such  opposition,  or  this  kind  of  a  bill,  and  that  they  will 
be  glad  to  see  it  placed  on  the  statute  books. 

What  we  want  is  a  real  American  merchant  marine.  We  do 
not  want  to  have  our  commerce  crushed  in  that  way. 

It  is  true  I  am  now  appealing  for  subventions  to  start 
the  American  merchant  marine,  and  establish  lines,  but  if  we 
do  not  establish  them  that  way  it  is  dcmbtful  what  we  will  secure 
under  government  plans  and  whether  we  will  obtain  the  right 
type  of  vessel.  What  we  need  is  to  secure  the  initiative  of  the 
American  people.  They  have  never  yet  been  called  upon  to  do 
a  public  service  and  given  the  chance  to  do  it,  that  they  have  not 
responded.  (Applause.) 

The  Government  bill  I  understand  calls  for  fifty  or  sixty 
million  dollars  to  be  appropriated.  How  many  ships  will  be  se- 
cured with  this  money  cannot  be  stated  definitely.  The  purchase 
value  of  steamers  or  the  building  cost  of  a  type  requisite  and 
essential,  and  I  am  now  speaking  of  South  American  require- 
ments, although  the  same  applies  to  all  other  countries,  will  not 
enable  us  to  obtain  these  ships  under  six  hundred  thousand  dol- 
lars to  one  million  dollars  each,  and  if  we  are  proposing  to  build 
under  the  supervision  of  a  shipping  board,  subject  to  naval 
necessities,  the  cost  may  be  as  high  as  a  million  and  a  quarter 
dollars. 

Therefore  we  cannot  figure  to  get  more  than  fifty,  or  sixty, 
or  seventy  ships  at  the  utmost. 

Now,  gentlemen,  can  you  tell  me  that  such  number  of  vessels, 
even  if  secured  under  this  bill,  is  going  to  relieve  the  present 
situation  and  afford  a  safeguard  to  our  commerce  in  future? 
Why,  it  will  not  be  a  flea-bite  as  against  our  real  needs. 

It  is  proposed  to  lease  or  the  Government  will  operate  these 
ships,  and  the  Secretary  tells  us  he  requires  a  mobile  fleet  as  well, 
a  fleet  which  can  be  sent  to  the  West  Coast  to  protect  our  timber 
interests,  or  to  the  South  to  do  likewise,  or  again  to  the  Southern 
ports  to  take  cotton  if  necessary,  thus  giving  us  relief  from 
foreign  domination.  Gentlemen,  this  cannot  be  done.  We  would 
have  to  go  to  Congress  again  next  year  and  frankly  say,  "We 
have  made  a  mistake.  We  do  not  want  sixty  millions  of  dollars 
— except  for  last  year — we  now  want  one  hundred  millions  more 
for  1917,"  and  this  would  be  an  endless  process. 

99 


Second  Session — Monday  Afternoon 


Of  course,  if  the  American  Congress  will  give  sufficient 
money  yearly  to  continue  a  program  of  building  or  acquiring 
ships  we  will  eventually  build  up  a  great  fleet,  but  I  do  not 
believe  the  American  public  will  be  willing  to  stand  back  of  such 
a  plan. 

Perhaps,  as  has  been  suggested  by  the  gentlemen  present, 
the  administration  might  change.  I  hope  not,  of  course,  but  the 
Secretary  might  go  out  of  office.  Then  someone  else  might  have 
a  different  policy,  and  no  ships  at  all  would  be  obtained.  Gentle- 
men, it  will  not  do  to  depend  on  sixty  or  seventy  vessels.  We 
require  today  ten  or  twenty  times  fifty,  or  sixty,  or  seventy  ships. 
(Applause.) 

The  Secretary  proposes  to  establish  a  shipping  board.  I 
join  with  him.  On  the  shipping  board,  however,  he  advocates 
placing  the  Secretary  of  the  Navy  and  the  Secretary  of  Com- 
merce, both  splendid  men,  and  our  friend  says  he  has  eliminated 
himself.  I  would  rather  have  the  Secretary  there  than  I  would 
either  of  the  other  two  gentlemen,  because  neither  of  the  others 
has  shown  a  decided  inclination  to  build  up  American  shipping, 
and  he  has,  but  I  believe  it  would  be  best  to  have  a  non-partisan 
board,  and  that  it  is  wise  to  keep  politics  out.  Five  or  seven  well- 
versed  business  citizens  will  be  best — men  who  have  had  proper 
training  in  shipping  methods — two  members  of  the  Cabinet 
on  a  board  would  probably  regulate  it. 

Under  this  plan  a  policy  inaugurated  by  a  shipping  board 
would  be  carried  out  without  reference  to  an  incoming  adminis- 
tration. 

That,  of  course,  is  a  minor  detail,  but  at  the  same  time  it 
is  worthy  of  thought. 

There  are  other  things  with  which  the  business  men  of  the 
country  thoroughly  agree  with  Mr.  McAdoo,  and  it  is  satis- 
factory to  state  that  he  has  shown  an  inclination  to  meet  this 
issue  fairly  as  far  as  possible. 

The  Secretary  proposes  to  establish  lines  to  Brazil,  Uruguay, 
Argentine  Republic,  Colombia,  Ecuador,  Peru,  Chile,  to  the 
Orient,  touching  at  Honolulu,  and  to  Japan,  China  and  the  Phil- 
ippine Islands — also  presumably  to  Australia,  New  Zealand, 
South  Africa  and  India,  the  necessity  of  communication  to  these 
last  named  places  being  equally  great.  Such  lines  would  absorb 
practically  the  entire  number  of  steamers  to  be  built. 

There  is  a  presumption  that  the  Shipping  Board  to  be  estab- 
lished might  have  authority  to  lease  ships,  but  I  do  not  under- 

100 


The  Merchant  Marine  and  Pending  Legislation 

stand  that  this  means  the  leasing  of  such  further  vessels  as  may  be 
demanded  by  our  commercial  needs,  and  that  such  unlimited 
power  is  to  be  given  to  the  Board,  but  rather  that  the  proposal 
intends  merely  the  leasing  of  the  ships  which  are  built  under 
the  appropriation. 

The  Question  of  Government  Control 

The  statement  is  made  that  by  creating  a  corporation  under 
government  control  to  handle  shipping  required,  the  government 
is  not  really  in  the  shipping  business,  but  a  statement  of  that 
kind  will  not  for  a  moment  deceive  anyone,  nor  will  the  people 
fail  to  realize  that  the  appropriation  of  their  money  under  such  a 
plan  is  a  pure  subsidy,  and  the  worst  kind  of  a  subsidy,  only 
justified,  if  at  all,  as  a  temporary  measure  based  on  war  re- 
quirements. 

The  question  of  permanent  and  continual  operation  by  the 
government  is  the  main  point  at  issue,  and  one  which  the  ad- 
ministration should  promptly  forego  in  the  interest  of  our  com- 
merce, to  the  end  that  this  matter  might  be  treated  as  a  non- 
partisan  question,  and  through  a  conference  of  all  interests  a 
wise  measure  might  be  promptly  passed  by  Congress,  so  that  im- 
mediate action  of  some  kind  could  be  taken. 

To  discuss  at  length  all  these  points  today  is  impossible,  but 
briefly  I  might  state  that  the  public  undoubtedly  concur  in  the 
view  we  should  have  promptly  the  necessary  vessels  to  cooperate 
with  the  Navy  department.  All  agree  that  immediate  action  is 
essential.  We  concur  in  the  statement  that  American  lines 
handled  by  American  citizens  should  be  established  to  all  the 
markets  named. 

We  fully  agree  that  American  dependence  upon  foreign 
ships  should,  so  far  as  possible,  be  eliminated.  We  endorse  the 
statement  that  American  merchants  should  have  rates  and  service 
as  good  as  if  not  better  than  those  afforded  by  other  countries  to 
their  merchants. 

A  Federal  license  for  all  lines  running  regularly  in  the  deep 
sea  trade  would  go  far  to  accomplish  the  purpose  of  regula- 
tion; and  it  is  only  just  that  alien  lines  that  enjoy  the  privileges 
of  our  ports  should  be  amenable  to  American  law. 

We  fully  agree  that  the  board  should  adopt  methods  to  have 
American  seamen  trained  on  our  commercial  vessels,  and  that 
these  men  should  be  placed  on  a  naval  reserve  list,  at  proper 
compensation. 

101 


Second  Session — Monday  Afternoon 


I  fully  concur  with  Secretary  McAdoo  that  we  should  have 
the  courage  to  go  ahead;  but  it  is  a  grave  question  whether  the 
plan  as  outlined  has  been  given  that  consideration  and  care 
which  warrants  our  being  as  optimistic  as  the  Administration 
seems  to  be. 

It  is  important  to  know  what  the  people  of  the  country  wish. 
A  year  ago,  desiring  to  find  this  out  the  Chamber  of  Commerce 
of  the  United  States  of  America  decided  to  place  the  matter 
before  their  constituent  bodies  in  the  form  of  a  referendum.  I 
had  the  fortune,  or  misfortune,  to  be  Chairman  of  the  Merchant 
Marine  Committee,  which  was  composed  of  gentlemen  from  dif- 
ferent parts  of  the  country,  and  we  presented  a  report  last  Feb- 
ruary to  the  Chamber. 

There  was  considerable  discussion.  Secretary  McAdoo  at 
that  time  made  a  very  able  address  from  his  standpoint.  The 
referendum  included  Secretary  McAdoo's  speech,  Congressman 
Burton's  speech  and  the  Committee's  report.  Some  700  or  800 
votes  were  cast  representing  over  300  of  the  leading  commercial 
organizations  of  the  country,  and  I  believe  39  States  reported 
on  the  proposition. 

It  is  impossible  to  give  the  full  details  here,  but  the  judg- 
ment of  the  business  men  was  as  follows : 

550  votes  were  cast  in  favor  and  189  against  the  government 
granting  subsidies  to  American  ship-owners  to  offset  the  differ- 
ence in  cost  between  operation  of  vessels  under  the  American 
flag  and  operation  in  the  same  deep  sea  trades  under  foreign  flags. 

713  votes  were  in  favor  and  only  52  votes  opposed  sub- 
ventions by  the  government  to  establish  regular  mail  and 
freight  lines  under  the  American  flag  to  countries  in  which  the 
commercial  interests  of  the  United  States  are  important,  and  to 
American  dependencies. 

639  votes  in  favor  as  against  113  votes  in  opposition  to  the 
creation  of  a  Federal  Shipping  Board,  to  investigate  and  report 
to  Congress  regarding  the  navigation  laws  and  to  have  full  juris- 
diction under  the  law  in  all  matters  pertaining  to  oversea  trans- 
portation. 

692  votes  were  in  favor,  58  votes  opposed  to,  the  ocean  mail 
law  of  1891  being  amended  by  lowering  the  speed  for  first-class 
steamers  from  20  to  16  knots,  and  for  second-class  steamers 
from  1 6  to  12  knots,  and  to  make  the  compensation  adequate 
to  permit  the  establishment  of  lines  of  steamships  carrying  our 
mail  and  freight.  You  will  take  special  note  that,  in  case  Congress 

102 


The  Merchant  Marine  and  Pending  Legislation 

should  make  the  reduction  in  speed,  the  vote  was  emphatic  that 
the  compensation  by  the  shipping  board  to  be  named  should  be 
such  as  to  create  the  mail  and  freight  lines  desired,  that  is, 
the  country  was  willing  to  pay  out  any  sum  that  was  essential, 
and  did  not  limit  the  payment  to  the  compensation  of  $4  and  $2 
outward  under  the  Act. 

By  a  vote  of  60 1  in  favor  to  133  opposed  it  was  considered 
desirable  to  abolish  deferred  rebates  and  to  provide  for  super- 
vision of  rates  by  the  Federal  Shipping  Board,  with  the  require- 
ments for  filing  with  the  Board  schedules  of  rates  and  all  agree- 
ments among  over-sea  lines.  This  was  a  most  decisive  vote,  and 
should  convince  our  lawmakers  that  the  people  of  this  country 
desire  proper  and  fair  regulation  of  rates  in  their  interest  by  a 
Shipping  Board. 

The  vote  was  610  in  favor  to  120  opposed  to  the  committee's 
recommendation  that  Federal  license  should  be  taken  out  by  all 
lines,  domestic  or  foreign,  engaged  in  shipping  between  the  ports 
of  the  United  States  and  other  countries. 

More  decisive  still,  however,  showing  clearly  the  feeling  of 
the  country,  was  the  ballot  regarding  the  government's  proposi- 
tions, and  690  votes  were  opposed  as  against  89  votes  favoring  the 
purchase,  construction  or  charter  of  vessels  for  mercantile  pur- 
poses combined  with  operation,  by  the  government,  of  such  vessels. 

713  votes  were  cast  opposing  and  51  votes  only  in  favor  of 
ownership  of  merchant  vessels  by  the  government,  even  if  said 
vessels  were  operated  by  private  parties  under  leases. 

There  was  also  a  proposition  to  create  a  marine  company, 
acting  under  the  supervision  of  the  Shipping  Board,  to  loan 
money  on  mortgages  on  vessels.  The  vote  was  416  in  favor, 
314  opposed.  As  this,  however,  was  not  a  two-thirds  majority,  the 
United  States  Chamber  of  Commerce  was  not  committed  to  ad- 
vocate such  a  proposition. 

I  think  the  people  of  this  country  know  to  a  large  extent 
what  they  do  want,  and  I  believe  they  are  better  judges  of  the 
situation  than  two,  three  or  four  men,  no  matter  how  powerful 
they  may  be  at  the  moment  in  administering  the  affairs  of  this 
country,  and  that  the  people's  voice  should  be  listened  to,  and 
that  they  should  have  some  say  as  to  the  settlement  of  this  ques- 
tion. 

So  great  has  been  the  advance  in  cost  of  vessels,  and  so 
great  is  the  demand  for  ships,  that  at  present  our  yards  are  un- 
able to  take  further  contracts  inside  of  eighteen  months,  which 

103 


Second  Session — Monday  Afternoon 


means  the  ships  would  not  be  turned  out  for  two  and  a  half  to 
three  years. 

One  hundred  dollars  a  ton  is  being  asked  to  build  ships  as 
against  sixty  before  the  war.  The  same  condition  prevails  in 
England  today,  and  this  serious  position  must  also  be  faced. 

Under  these  conditions  American  merchants  are  hardly  justi- 
fied in  buying  or  building  to  any  appreciable  extent,  as  they 
fully  realize  that  so  soon  as  the  war  is  over  the  situation  will 
gradually  change,  and  their  ships  will  rapidly  depreciate  in  value. 

Therefore,  I  fully  agree  with  SecretaryMcAdoo  and  am  will- 
ing to  become  his  champion  and  believe  that  the  shipping  board 
should  be  given  not  sixty  millions  of  dollars,  but  a  larger  amount 
to  buy  or  build,  because  by  so  doing  we  will  secure  quicker 
results.  The  Government  loss  may  be  substantial,  but  the  Amer- 
ican people  are  willing  that  that  loss  should  be  made. 

Let  the  administration  meet  the  merchants  half  way.  Do 
not  let  them  be  pigheaded,  if  we  are  not  stubborn. 

All  that  has  to  be  done,  in  my  opinion,  to  meet  this  situation 
to  satisfy  you,  gentlemen,  and  the  business  world,  is  to  have  a 
proper  committee  decide  this  question,  and  the  Government  should 
give  way  on  one  point,  and  that  is  permanent  Government  control 
and  operation. 

Then  let  the  Government,  having  secured  the  ships  at  the  best 
price  possible,  establish  the  lines  desired  for  our  benefit. 

Let  the  steamers  be  leased  at  a  small  annual  percentage  on 
the  cost  of  purchase  or  building,  and  a  reasonable  amount  for 
amortization. 

The  lines  once  established  then  allow  the  contractors  to  add 
to  the  lines  as  trade  demands  with  vessels  purchased  or  built  by 
the  contractor,  and  allow  the  Government  to  grant  a  judicious 
and  wise  subvention  yearly  for  carrying  our  mails  and  over- 
coming the  extra  cost  of  operation  under  the  American  flag,  the 
amount  to  be  agreed  upon  between  the  board  and  the  contractor. 

When  the  leases  run  out  Government  vessels  to  be  rehired 
or  the  Government  can  take  them  over  for  naval  requirements, 
or  they  can  be  sold. 

Under  such  a  system  I  agree  largely  with  Government  plans, 
excepting  Government  operation,  and  I  would  personally  even  be 
willing  to  meet  the  administration,  if  it  is  not  possible  to  start  the 
lines  by  leasing,  and  allow  operation,  the  period,  however,  to  be 
limited  to  not  more  than  two  years  after  the  war  in  Europe  is 
ended,  the  vessels  then  to  be  sold  or  taken  over  by  the  Govern- 

104 


The  Merchant  Marine  and  Pending  Legislation 

ment,  thus  automatically  closing  their  interest  in  the  shipping 
business. 

Besides  these  lines  we  must  have  the  large  essential  fleet 
of  tramp  steamers  desired.  The  Government  bill  does  not  pro- 
vide for  their  creation.  I  am  satisfied  that  it  would  be  the  part 
of  wisdom  to  give  the  shipping  board  complete  and  absolute  au- 
thority, if  merchants  will  be  willing  to  build  ships  under  plans 
and  terms  agreed  upon,  to  pay  reasonable  compensation  yearly 
to  owners  operating  in  the  deep-sea  trade,  the  period  of  payment 
to  be  limited  to  not  exceeding  twelve  to  fifteen  years.  This 
would  equalize  cost  of  operation,  and  the  vessels  to  be  always 
subject  to  Government  call. 

Therefore,  I  say  let  us  merchants  take  the  hand  of  the  Gov- 
ernment if  they  are  willing  to  have  their  hand  taken,  and  cooper- 
ate with  them  through  a  proper  committee  to  the  end  that 
we  can  unite  on  measures  which  will  bring  results,  and  stop  quar- 
reling, because,  gentlemen,  if  you  allow  Congress  to  quarrel  over 
this  question  all  next  winter  no  one  knows  when  we  will  secure 
that  protection  of  our  commercial  interests  which  we  are  all  so 
anxious  to  have.  (Applause.) 

MR.  BAKER:  May  I  ask  Mr.  Douglas  one  or  two  questions, 
Mr.  Chairman? 

THE  CHAIRMAN:  Certainly. 

MR.  DOUGLAS:  I  will  be  very  pleased  to  answer.  I  have, 
however,  already  spoken  longer  than  I  intended. 

MR.  BAKER:  First,  if  I  may  say  so,  I  think  you  did  a  great 
injustice,  without  knowing  the  full  circumstances  with  regard  to 
the  preparation  of  legislation  in  August,  1914,  when  the  emergency 
bill,  so-called  Ship  Registry  bill,  was  considered.  Were  you 
present  at  that  meeting? 

MR.  DOUGLAS  :  In  Washington,  in  August,  1914,  at  the  Wil- 
lard  Hotel?  I  was. 

MR.  BAKER  :  You  remember,  then,  very  well,  the  committef 
that  was  appointed? 

MR.  DOUGLAS:  Yes.* 

MR.  BAKER:  Composed  of  the  President  of  the  United 
States  Steel  Corporation,  Mr.  Franklin  and  Captain  Dollar  and, 
I  think,  Mr.  Curlin,  of  New  York,  was  our  counsel,  and  myself. 

MR.  DOUGLAS  :  Yes. 

MR.  BAKER:  Days  and  nights  were  devoted  to  that — many 
nights.  Mr.  Franklin  was  a  very  busy  man,  and  also  the  Presi- 
dent of  the  United  States  Steel  Corporation,  Mr.  Farrell,  had 

105 


Second  Session — Monday  Afternoon 


to  go  away,  and  left  it,  I  think,  mainly  to  Captain  Dollar  and 
myself.  During  the  course  of  that  time  a  question  was  brought 
up  as  to  whether  private  capital  could  be  secured  under  any  cir- 
cumstances. A  representative  of  the  largest  financial  interest  in 
this  country  was  sent  down  there,  and  the  statement  was  posi- 
tively made  that  it  was  impossible  under  any  circumstances, 
under  those  conditions,  to  secure  private  capital.  Am  I  right? 

MR.  DOUGLAS:  I  presume  you  are,  Mr.  Baker. 

MR.  BAKER:  Then  came  the  question  as  to  what  they  pro- 
posed. It  was  suggested  by  them  that  if  the  United  States  Gov- 
ernment would  endorse  bonds — and  the  statement  was  made  that 
they  had  nineteen  Senators  with  them — for  the  purpose  of  buying 
the  interned  German  ships  it  could  be  done,  and  it  was  the  only 
thing  they  proposed.  What  would  have  been  the  result  today 
if  we  had  bought  them  ? 

MR.  DOUGLAS:  You  ask  me? 

MR.  BAKER:  Yes. 

MR.  DOUGLAS:  I  think  that  those  ships  could  have  been 
secured  at  the  beginning  of  the  war  without  any  trouble  to  this 
country  whatever. 

MR.  BAKER:  With  the  United  States'  money? 

MR.  DOUGLAS:  With  the  United  States*  money;  if  we  had 
gone  to  the  English  Government  and  represented  to  them  that 
these  ships  would  be  used  solely  and  entirely  for  mercantile 
purposes  to  ports  of  the  world  where  their  interest  would  in  no 
wise  have  been  affected.  It  is  true,  possibly  the  German  Govern- 
ment would  not  have  sold,  but  they  might  have  been  willing,  and 
in  such  case  the  amount  of  payment  could  have  been  held  in 
escrow  during  the  pendency  of  the  war.  Naturally,  however, 
this  discussion  is  simply  theoretical. 

MR.  BAKER:  Yes. 

MR.  DOUGLAS:  So  that  I  do  not  know  whether  you  or  I 
are  right  or  wrong. 

MR.  BAKER:  Now,  second:  You  spoke  of  only  eleven  knots' 
speed  of  the  vessel  in  the  South  American  trade.  You  know  that 
there  is  on  record  in  testimony  before  Congress  where  they  have 
three  very  large  ships  of  sixteen  knots — 

MR.  DOUGLAS:  The  Lamport  &  Holt  people,  I  think,  claim 
that  they  have  sixteen  knot  ships.  They  may  have  one  or  two, 
according  to  my  judgment,  with  the  surface  of  the  sea  as  quiet 
as  the  floor  of  this  room,  that  will  steam  fourteen  knots.  I  do 
not  think  they  can  do  better  than  that,  though  I  may  be  mistaken. 

106 


The  Merchant  Marine  and  Pending  Legislation 

MR.  BAKER  :  You  have  had  long  experience  in  the  steamship 
business  and  you  know  the  conditions. 

MR.  DOUGLAS:  I  only  know  they  claim  they  have  several 
vessels  of  that  sort. 

MR.  BAKER:  One  other  question.  You  spoke  of  this  bill 
and  what  it  proposed.  Do  you  know  just  exactly  what  was 
proposed  in  this  bill? 

MR.  DOUGLAS  :  I  only  know  what  Secretary  McAdoo  says  in 
his  Indianapolis  speech. 

MR.  BAKER  :  Oh,  yes. 

MR.  DOUGLAS  :  Of  course,  I  have  tried  to  get  the  bill  that  now 
is  going  to  Congress,  but  there  seems  to  be  great  secrecy  attached 
to  it  and  precautions  taken  so  that  it  cannot  be  obtained  at  the 
present  time. 

MR.  BAKER  :  While  I  have  no  authority  for  saying  so,  except 
my  own  opinion,  I  do  say  that  I  think  you  will  be  thoroughly 
satisfied  with  it. 

MR.  DOUGLAS:  I  have  tried  to  meet  the  Secretary  on  every- 
thing but  one  or  two  issues,  and  I  hope  he  will  meet  me  on  these. 

There  should  be  immediate  hearings  in  Washington.  The 
most  influential  commercial  bodies  of  the  country  should  be  asked 
to  attend,  and  proper  plans  laid  down  on  wise  and  conservative, 
yet  liberal  basis,  to  place  as  quickly  as  possible  the  American  flag 
on  a  sufficient  number  of  American  owned  steamers  to  handle  a 
reasonable  percentage  of  American  commerce. 

Under  no  circumstances  should  we  allow  Congress  to  waste 
a  further  six  months  in  discussion,  and  finally  pass  no  legislation 
whatever.  Time  is  too  precious  and  the  opportunity  too  great 
to  tolerate  anything  of  this  character. 

MR.  COWLES  :  May  I  ask  Mr.  Baker  a  question,  Mr.  Chair- 
man, please? 

THE  CHAIRMAN  :  I  think  we  ought  to  go  on  with  the  pro- 
gram, if  you  please.  These  questions  can  come  up  during  the 
general  discussion  later.  We  will  now  go  on  to  the  question  of 
the-  five-minute  discussions,  and  I  beg  of  you,  gentlemen,  as 
I  call  you,  to  try  to  confine  yourselves  to  the  five  minutes. 
I  will  drop  the  gavel  at  the  end  of  five  minutes,  and  I  ask  that 
you  do  not  encroach  beyond  that  time,  so  that  all  who  desire  to 
speak  may  have  an  opportunity  to  do  so. 

First,  I  will  call  on  Mr.  C.  L.  Chandler,  Agent  of  the  Freight 
Traffic  Department  of  the  Southern  Railway  Company  and  a 
group  of  other  railways. 

107 


Second  Session — Monday  Afternoon 


MR.  CHANDLER:  Mr.  Chairman  and  gentlemen:  This  is  the 
National  Association  of  Manufacturers.  The  South  is  just  as 
much  in  the  nation  as  the  Island  of  Manhattan.  The  Island  of 
Manhattan  and  the  United  States  happen  not  to  be  synonymous. 

We  have  in  the  South  just  as  much  interest  in  export  trade 
and  export  business  as  any  part  of  the  country.  We  welcome 
the  inspiration  of  the  great  commercial  houses  which  for  over 
three  hundred  years  have  been  leading  the  way  here.  But  I 
call  your  attention  to  Charleston — Charleston,  where  we  have 
just  spent,  where  my  railroad  has  just  spent,  $600,000  in  the 
construction  of  the  largest  coal  export  terminal  in  the  United 
States.  Charleston  at  one  time,  I  remind  you,  had  a  greater 
export  business  than  New  York.  Remember  that!  Remember 
that  the  work  which  my  office  is  doing  is  significant,  is  worthy 
of  note.  We  are  trying  to  have  the  South  come  into  its  own. 

We  have  got  20,000  persons  studying  the  Spanish  language 
in  the  South.  A  railroad,  a  soulless  corporation,  an  undesirable 
citizen  is  doing  that  educational  work.  It  is  doing  that  great 
work  which  no  one  else  will  do.  We  have  20,000  persons  study- 
ing Spanish  and  1,000  persons  studying  Portuguese  down  there, 
That  is  what  has  been  accomplished  under  the  system  that  we 
have  down  there. 

I  have  gone,  personally,  to  over  three  hundred  firms  down 
there  that  have  not  been  exporting,  and  have  tried  to  get  them 
to  do  that  exporting  business.  When  Pedro  Gomez  wants  to 
buy  something  in  the  United  States  and  John  Smith  makes  any- 
thing that  they  want  down  there  in  South  America,  we  try  to 
bring  them  into  direct  contact  with  each  other,  as  directly  as  we 
possibly  can. 

There  are  steamship  lines  going  from  Mobile,  which  is  also 
on  the  map,  as  well  as  New  York  and  Philadelphia  and  other 
places.  Steamship  lines  are  going  down  from  there  directly  to 
Argentina. 

There  is  business  from  North  Carolina  which  was  started 
100  years  ago  that  is  going  down  there,  and  from  the  other 
southern  cities. 

We  have  heard  this  afternoon  Mr.  Dixon  giving  an  able 
talk  about  certain  phases  of  the  public  service  of  the  railroads, 
and  of  the  Pennsylvania  Railroad  in  particular;  but  there  is 
another  and  broader  public  service  which  the  railroad  systems 
that  I  have  been  working  for  were  the  first  in  this  country  to 
initiate,  and  that  is  to  go  after  the  exporter  directly  and  tell 

108 


Merchant  Marine — General  Discussion 


him  what  to  do,  to  tell  him  to  do  it,  and  to  tell  him  how 
to  do  it. 

Chattanooga!  Chattanooga  has  the  only  export  committee 
in  the  country — the  chairman  is  here — that  meets  twice  a  week. 
It  has  a  Manufacturers'  Association  that  is  alert  and  up  to  date. 
Chattanooga,  the  first  city  in  the  United  States  to  begin  export- 
ing within  ten  years  after  it  was  founded,  the  only  city  in  the 
United  States  with  three  different  firms  exporting  plows. 

We  are  working  there  in  the  South.  We  have  got  more 
children  studying  Spanish  in  Chattanooga  than  in  Worcester, 
Massachusetts,  with  200,000  people  and  not  a  single  child  study- 
ing it.  In  Chattanooga  we  have  175  children  studying  Spanish. 

Remember  the  South  is  on  the  map. 

Brunswick,  Georgia,  with  10,000  people,  has  150  children 
studying  Spanish  in  the  high  schools,  when  there  are  places  in 
New  Jersey  with  100,000  people  and  not  one  single  child  studying 
that  language.  Don't  forget  the  South. 

The  Southern  Railway  serves  the  South,  also  the  Mobile  & 
Ohio. 

The  Southern  Railway,  the  Queen  &  Crescent  route  and  the 
Mobile  &  Ohio  Railroad  are  all  trying  to  develop  the  South  and 
to  put  it  on  the  map.  The  Southern  Railway  embraces  within 
its  limits  the  oldest  railroad  in  the  United  States. 

Remember  that  the  South  is  just  as  much  a  part  of  the 
United  States  as  any  other  part  of  the  United  States  that  has 
been  represented  here  today. 

I  have  no  more  time  left.  I  merely  wanted  to  emphasize 
that  feature  of  the  public  activities  of  the  railroads,  and  of  the 
cities  and  of  the  people  of  the  South.  (Laughter  and  applause.) 


THE  CHAIRMAN  :  And  he  comes  from  New  England,  too ! 
(Laughter.) 

We  will  next  hear  from  P.  H.  W.  Ross,  President  of  the 
National  Marine  League  of  the  United  States. 

MR.  Ross :  Mr.  Chairman  and  Gentlemen  of  the  Convention : 
We  have  had  some  very  lively  little  speeches  here  today.  It 
would  be  impossible  for  me  either  to  maintain  the  heat  of  argu- 
ment or  to  uphold  the  declarations  that  we  have  heard  from  our 
Southern  friend  and  also  from  others. 

There  are  some  things,  however,  that  we  cannot  be  all  the 
time  shouting  to  high  heaven.  Sometimes  we  have  to  think 

109 


Second  Session — Monday  Afternoon 


quietly  (laughter),  and  sometimes  we  have  to  analyze  the  rea- 
sons that  have  led  us  to  make  our  conclusions.  So  that  I  shall 
occupy  my  five  minutes  in  that  endeavor. 

Mr.  Baker  has  called  attention  to  the  terrible  congestion  exist- 
ing in  all  our  ports,  due  to  the  absence  of  the  necessary  tonnage 
in  our  foreign  trade  to  properly  give  our  farmers,  cotton  planters, 
lumbermen,  manufacturers  and  merchants  the  facilities  needed 
for  the  transport  of  American  products  to  the  ultimate  consumers 
thereof. 

The  general  traffic  agent  of  one  of  our  great  railroads  told 
me  yesterday  that  there  were  44,000  cars  tied  up  between  Buffalo 
and  New  York!  Bad  as  that  is,  conditions  on  the  Pacific 
Coast  are  even  worse.  Wheat  is  being  sent  from  Portland, 
Oregon,  to  New  York  for  export.  With  the  Pacific  Ocean  prac- 
tically lapping  their  front  doorsteps  wheat  shippers  have  to  send 
their  cargoes  3,232  miles  inland,  during  which  journey  these 
cargoes  are  lifted  up  into  the  air  and  down  again  some  30,000 
feet,  in  transit  across  mountain  ranges,  in  order  to  reach  tide- 
water once  more.  But  that  is  as  far  as  they  go — blocked  again 
on  the  Atlantic  Coast!  As  a  consequence  of  the  railroad  block- 
ade, due  to  stoppage  of  exports,  transportation  of  food  and  com- 
modities from  our  "Granger"  states  to  their  own  home  markets 
is  violently  dislocated.  As  a  result  the  valuable  fruits  of  the 
Northwest  and  in  fact  perishable  foodstuffs  of  all  kinds  are 
rotting  on  the  farms  for  lack  of  transportation  even  to  neigh- 
boring states. 

Well  may  the  New  York  Times  say  that  "America  is  men- 
aced by  a  ship  shortage." 

I  believe  that  this  deplorable  state  of  affairs  is  chiefly  due 
to  a  certain  economic  fallacy  that  has  possessed  the  minds  of 
many  of  our  best  and  most  conscientious  citizens.  So  deep  rooted 
is  this  conviction  that  it  is  really  an  act  of  mental  self-abnega- 
tion on  their  part  to  relinguish  it.  I  refer  to  the  oft  quoted 
dicta  that  "it  is  better  to  let  the  foreigner  do  our  ocean  carry- 
ing because  he  can  do  it  cheaper  than  we  can  ourselves,  and  that 
we  can  employ  our  money  to  better  advantage  in  other  ways." 
Another  is  that  "we  need  not  worry  about  the  freight,  the  for- 
eigner pays  the  freight  on  all  exports." 

The  greatest  danger  in  these  arguments  lies  in  the  fact  that 
they  are  partly  true.  Unfortunately  the  promoters  of  these  doc- 
trines do  not  allow  for  the  change  in  conditions  that  have  robbed 

110 


Merchant  Marine — General  Discussion 


them  of  application  to  existing  American  affairs.  National  life 
is  growth  and  growth  is  change. 

A  thing  of  comparatively  small  and  only  relative  goodness 
must  always  be  abandoned  when  replaced  by  a  thing  of  very 
great  and  all-inclusive  goodness. 

Granted  that  it  is  good,  as  one  form  of  economy,  to  let  others 
perform  services  for  us  on  the  high  seas  which  they  can  do 
cheaper  than  we  can,  at  present,  is  it  not  true  that  a  far  greater 
benefit  accrues  to  us  in  having  the  control  of  the  ocean  trans- 
portation of  our  products  in  our  own  hands? 

The  temporary  and  immediately  visible  cost  of  Americans 
doing  their  own  ocean  carrying  may  seem  greater,  but  the  real,  the 
far-reaching  and  ultimate  loss  in  a  thousand  directions  to  the 
whole  body  economic  of  America  is  a  thousandfold  greater 
if  we  do  not. 

Therefore,  no  matter  how  great  the  sacrifice  may  seem  to  be 
at  the  outset,  we  must  set  our  maritime  house  in  order  forthwith 
if  we  are  to  save  ourselves  from  the  most  serious  stoppage  of 
our  national  development. 

It  is  a  great  mistake  to  imagine  that  the  foreigner  pays  our 
export  freight  bills.  He  did  once  upon  a  time,  to  a  certain  extent, 
when  he  needed  something  that  no  other  nation  could  supply. 
He  does  it  still  to  a  limited  extent  under  stress  of  very  abnormal 
conditions,  on  certain  exceptional  classes  of  exports,  but  never 
when  any  other  nation  has  the  same  sort  of  thing  to  sell  that  we 
want  to  sell,  and  never  will  he  again  in  the  normal  future,  because 
we  are  now  selling  the  same  kind  of  things  that  he  can  buy 
elsewhere. 

Old  theories,  old  beliefs  die  hard,  because  they  are  old, 
but  chiefly  because  the  proponents  of  static  theories,  as  a  rule, 
do  not  allow  for  the  constant  flux  and  change  in  trade  conditions 
that  every  year  brings  in  its  train. 

Let  us  take  the  case  of  any  man  in  any  business  who  has 
something  to  sell ;  your  own  case.  If  your  competitor  offered  to 
deliver  your  goods  to  your  customers,  and  you  knew  that  he 
also  was  selling  much  the  same  line  of  goods  to  the  same  people, 
would  you  let  him  do  it  ? 

Instinctively  you  wouldn't,  even  if  you  had  the  highest 
respect  for  your  competitor.  You  would  know  that  it  was  asking 
too  much  of  human  nature  to  expect  such  wholesale  altruism 
of  your  competitor,  knowing  moreover  that  he  stood  in  a  fiduciary 

111 


Second  Session — Monday  Afternoon 


relation  to  his  stockholders  or  co-venturers  and  that  his  first  duty 
was  to  them,  on  all  points  of  the  trading  game.  You  would 
decline  his  offer  and  do  your  own  delivery,  because  you  know  it 
was  the  only  thing  to  be  done. 

Well,  it  is  just  this  instinctive  impulse  of  self-help  in  maritime 
transportation  that  we  must  implant  and  develop  throughout  all 
of  industrial  America,  especially  in  the  states  of  the  interior. 

Perhaps  in  thus  addressing  an  International  Trade  Confer- 
ence it  may  seem  that  I  am  concerned  too  much  with  the  purely 
American  point  of  view.  Being  heart  and  soul  American  and 
nothing  else,  I  cannot  avoid  that  stand. 

But  the  same  principles  apply  to  all  nations  having  latent 
maritime  possibilities  and  not  making  the  fullest  possible  use  of 
them. 

It  was  Bismarck  who  said  of  Germany:  "The  merchant 
marine  service  is  the  handmaid  of  all  other  industries,  and  of 
agriculture,  manufactures  and  commerce.  On  the  day  when  the 
freight  trade  is  given  over  to  foreigners  a  mortal  blow  will  be 
dealt  to  all  the  industries  of  the  country." 

Countless  generations  of  Englishmen  have  applied  this  prin- 
ciple to  the  development  of  British  commerce,  and  in  conclusion 
it  may  be  said  of  any  nation  in  any  part  of  the  world,  whose 
industrial  growth  has  reached  the  stage  of  exporting  necessity, 
that  if  provision  is  not  made  for  more  or  less  national  independ- 
ence in  the  matter  of  ocean  transportation,  that  nation  will  always 
be  the  commercial  servitor  of  other  nations  which  have  attained 
this  power. 

Gentlemen,  I  thank  you.     (Applause.) 


THE  CHAIRMAN  :  We  will  next  hear  from  Captain  William 
P.  White,  Treasurer  of  the  Lowell  Paper  Corporation,  of  Lowell, 
Mass. 

CAPTAIN  WHITE  :  The  title  of  "Captain"  which  the  chairman 
has  applied  to  me  perhaps  requires  a  word  of  explanation.  I  will 
say,  therefore,  that  I  am  a  naval  officer  on  the  retired  list.  I 
have  been  five  years  in  business,  however,  and  I  am  not  talking 
now  from  the  naval  officer's  standpoint  entirely,  but  from  the 
business  man's  standpoint. 

In  the  first  place,  Mr.  Baker,  in  his  paper,  made  a  statement 
regarding  the  passage  of  the  so-called  La  Follette  bill,  and  said 

112 


Merchant  Marine — General  Discussion 


that  there  were  no  opposing  voices  in  the  Senate  when  it  was 
passed. 

I  think  Senator  Gallinger  has  recently  explained  why  there 
were  no  opposing  voices. 

The  next  thing  is  the  title  of  the  bill:  "A  Naval  Reserve 
Marine." 

Mr.  Douglas  is  quite  right.  What  the  navy  wants  is  not 
what  the  merchant  wants.  I  know,  because  it  was  one  of  my 
duties  to  inspect  merchant  vessels,  and  I  was  an  officer  on  the 
Yosemite  when  she  was  in  the  employ  of  the  Government.  I 
know  what  a  merchant  ship  is  like,  and  I  know  what  a  man-o'-war 
is  like,  and  I  know  what  they  each  require.  You  cannot  fit  them 
in. 

We  made  a  purchase  of  a  lot  of  derelicts  before  the  Spanish- 
American  war,  because  we  could  not  get  anything  else.  And 
when  you  go  into  the  market  for  necessities  you  take  what  you 
can  get,  and  you  pay  what  the  other  fellow  asks  you  to  pay 
for  them,  or  else  you  don't  get  them.  That  is  the  reason  for 
the  deterioration,  the  enormous  depreciation  of  our  material. 

It  is  the  question  of  the  Government  going  into  business. 
And  I  do  not  believe  in  the  Government  going  into  business.  That 
is  not  what  government  is  for.  The  Government  is  to  make  laws 
so  that  business  men  can  do  business,  and  appoint  boards  so  that 
the  laws  will  be  executed.  They  have  no  business  in  business. 

When  the  board  that  is  to  be  appointed  is  to  determine 
what  the  oversea  rate  is  for  freight,  they  are  out  of  their 
bailiwick.  They  do  not  belong  there.  They  cannot  do  it.  It 
is  an  economic  question. 

The  reason  we  have  not  had  a  merchant  marine,  and  the 
reason  why  our  merchant  marine  died,  was  simply  due  to  various 
economic  causes.  One  of  them  is  a  question  of  taxation.  An- 
other one  is  a  question  of  the  labor  that  is  employed  on  the 
ships,  the  regulation  by  Congress  of  the  labor  that  is  employed, 
and  the  condition  of  labor  on  American  ships,  which  is  differ- 
ent from  the  conditions  of  labor  on  foreign  ships,  although  the 
laborer  himself  is,  in  99  cases  out  of  100,  identical. 

If  you  will  read  the  story  of  the  United  Fruit  Company's 
ships  that  sailed  between  New  York  and  Boston  and  the  West 
Indies  you  will  find  that  they  transferred  their  ships  from  the 
American  flag  to  the  Norwegian  flag  because  they  could  get  iden- 
tically the  same  men  to  do  the  work  at  less  wages.  They  will 
not  work  on  the  American  ship  at  the  same  wages.  There  are  cer- 

113 


Second  Session — Monday  Afternoon 


tain  requirements,  and  they  can  get  them,  and  those  requirements 
are  not  controlled  by  economic  conditions.  They  are  controlled 
by  a  labor  union  condition.  Those  people  who  know  about  the 
labor  union  conditions  on  the  Pacific  Coast  know  what  those  labor 
union  conditions  mean,  and  that  those  labor  union  conditions  will 
be  established  in  this  board,  if  we  undertake  to  start  our  Amer- 
ican commerce  by  this  board  under  the  present  laws. 

An  economic  condition  and  a  competitive  condition  we  have 
to  meet  in  various  ways.  There  is  no  question  now  but  that  the 
American  flag  has  passed  from  the  Pacific  Ocean,  and  the  Japa- 
nese are  firmly  established  there,  and  that  when  we  go  to  get 
our  ships  back  on  the  Pacific  Ocean  we  will  have  to  do  some- 
thing more  than  we  did  before.  We  shall  have  to  do  one  of 
two  things.  We  have  either  got  to  give  the  vessels  a  subvention, 
or  we  have  got  to  tax  the  material  that  comes  in  the  Japanese 
vessels  to  our  ports. 

As  between  trade  that  comes  to  our  ports  from  Japan  we 
cannot  make  taxation  of  that  kind.  But  just  as  soon  as  the 
Japanese  vessels  bring  freight  from  China  or  from  the  Philippine 
Islands  then  we  are  perfectly  justified  in  putting  on  a  dis- 
criminatory tax,  and  the  Japanese  can  do  exactly  as  we  do,  and 
we  will  get  a  share  outside  of  Japan  of  the  trade  that  is  in  the 
Pacific. 

That  same  condition  obtains  in  other  parts  of  the  world. 

We  are  perfectly  justified  in  taxing  material  that  comes  in 
English  ships  from  French  ports,  or  from  Dutch  ports,  and  giv- 
ing the  benefit  to  our  shipping;  but  we  are  not  justified  in  hiring 
ships  or  paying  ships  to  carry  freight  to  England  in  competition 
with  English  ships  that  are  established  in  the  same  business. 
There  is  an  economic  condition  that  cannot  be  overcome  by 
subvention,  without  paying  enormously  for  it ;  and  that  our  people 
will  not  do.  (Applause.) 

THE  CHAIRMAN:  I  will  next  call  upon  Mr.  W.  I.  Young, 
Vice-President  of  the  International  Traders',  Limited. 

He  does  not  seem  to  be  here. 

Mr.  A.  E.  Nettleton,  Syracuse,  New  York? 

He  does  not  respond. 

Gentlemen,  I  will  open  this  discussion  now,  to  the  meeting 
at  large,  for  five  minutes  to  each  speaker. 

MR.  ALEXANDER  R.  SMITH  :  I  should  like  to  ask  Mr.  Baker 
a  question,  if  I  may  be  allowed  to  do  so. 

114 


Merchant  Marine — General  Discussion 


THE  CHAIRMAN:  Certainly. 

MR.  ALEXANDER  R.  SMITH  :  Mr.  Baker  has  said  that  in  the 
foreign  trade  the  American  flag  has  disappeared  from  the  Pacific. 
I  ask  if  he  recalls  the  Spreckels  Line,  running  from  San  Fran- 
cisco to  New  Zealand  and  Australia.  That  line  is  a  line  of 
three  steamships,  American  built  steamships.  This  was  the  line 
that  put  an  additional  ship  on  the  route  since  the  Seamen's  Act 
went  into  effect.  We  have  three  American  built  steamships  run- 
ning across  the  Pacific,  and  there  is  not  a  newspaper  in  the  Uni- 
ted States  today  that  seems  willing  to  mention  that  fact.  So 
that  the  American  flag  has  not  disappeared  from  the  Pacific  in 
foreign  trade.  Mr.  Baker,  will  you  agree  with  that? 

MR.  BAKER:  I  agree.  I  acknowledge  my  error  there.  It  is 
a  fact  that  the  Spreckels  Line  has  three  quite  old  boats  re- 
modeled, in  operation  under  the  Mail  Contract  Act  of  1891. 

MR.  ALEXANDER  R.  SMITH  :  Regarding  that,  those  ships  em- 
ploy American  seamen.  The  agent  of  that  line  here  told  me 
that  it  was  easy  to  get  American  seamen  if  they  would  pay  the 
wages.  Rather  than  pay  the  wages  people  prefer  the  Chinese, 
and  not  any  longer  being  able  to  employ  the  Chinese  the  Amer- 
ican ships  have  disappeared  from  the  Pacific;  and  I  hope  they 
will  never  go  back  on  the  Pacific  employing  Chinese. 

MR.  BAKER:  I  hope  so,  too. 

MR.  QUINN  :  With  regard  to  this  matter  it  is  quite  true  that 
the  Spreckels  Line  is  running  from  San  Francisco  to  Sydney.  It 
it  not  correct  that  they  are  running  to  New  Zealand. 

MR.  ALEXANDER  R.  SMITH  :  I  beg  your  pardon.  I  thought 
they  were. 

MR.  QUINN:  The  itinerary  is  Honolulu,  Pago  Pago  and 
Sydney. 

There  is  another  line,  however,  which  was  perhaps  confused 
with  the  Spreckles  Line,  the  Union  Steamship  Company,  a  New 
Zealand  concern,  which  does  run  from  San  Francisco  to  Tahiti, 
New  Zealand  and  Sydney. 

I  explained  today  that  we  have  three  services  going  from  the 
Pacific  Coast  to  Australia  and  returning,  and  we  have  not  a 
single  service  that  goes  from  New  York  to  Australia  and  return. 

I  was  rather  amazed  to  find,  speaking  of  the  gentleman  who 
represented  Mr.  McAdoo,  Mr.  Woolley,  who  outlined  the  ports 
to  which  it  was  proposed  to  send  the  Administration  ships,  if 
they  should  ever  materialize,  that  he  did  not  mention  Australia; 
that  no  mention  was  made  of  Australia. 

115 


Second  Session — Monday  Afternoon 


MR.  WOOLLEY  :  I  beg  your  pardon ;  I  did  mention  Australia. 

MR.  QUINN  :  Excuse  me,  then.  I  was  sitting  back  here  quite 
aways,  and  I  did  not  hear  that. 

In  the  list  of  countries  mentioned  by  Mr.  Douglas  in  his 
remarks,  however,  I  think  Australia  was  not  mentioned;  simply 
South  America. 

MR.  WOOLLEY:  I  would  like  to  say  here  that  the  trade  to 
Australia  since  the  war  started  has  increased  60  per  cent. 

MR.  QUINN  :  Yes ;  I  delivered  an  address  here  this  morning 
in  which  I  mentioned  the  fact  that  Australia  was  not  only  one  of 
your  good  markets,  but  was  in  the  way  of  becoming  one  of  your 
best  markets. 

MR.  WOOLLEY:  I  am  sorry  to  say  that  I  was  not  here  to 
hear  you. 

MR.  QUINN:  I  would  like  also  to  point  out  this  fact:  this 
American  steamship  line,  the  Spreckels  Line,  was  running  under 
a  special  postal  subsidy  from  the  United  States  Government,  of 
$2  a  mile.  That  may  account  to  some  extent  for  their  being  in 
that  trade,  but  not  altogether. 

The  fact  is  that  they  are  running  to  Australia  in  competition 
with  Australian  lines,  because  of  this  fact :  the  Australian  seamen 
and  the  conditions  under  which  the  Australian  works  are  on  an 
equality  with  those  exacted  by  the  United  States  Government ;  and 
that  is  the  reason  they  are  able  to  compete,  and  that  is  the 
reason  why,  as  I  said  today,  the  trade  with  Australia  is  worth 
your  cultivation,  because  the  people  of  Australia  are  able  to  pay 
the  price  for  your  products,  and  the  people  of  the  Orient  are 
not  able  to  pay  it. 

DR.  SNOWDEN:  Just  one  other  thing  about  this  line  of 
steamers  running  to  Australia  that  might  be  of  interest,  and  that 
is  the  fact  that  a  few  years  ago  these  ships  were  taken  off  the 
Australasian  service,  I  think  on  account  of  the  difficulties  in  earn- 
ings; and  later  on  they  were  converted  into  oil-burning  ships, 
so  that  the  force  of  men  used  on  one  of  the  steamers,  it  has 
come  to  my  attention,  was  decreased  from  55  or  60  to  7. 
It  requires  only  7  men  to  take  care  of  the  stoking  part  of 
the  ship  on  the  oil-burning  system,  so  that  a  large  part  of  the 
labor  difficulty  was  thus  overcome. 

MR.  COWLES:  I  would  like  to  ask  Mr.  Baker  a  question  if 
I  may,  Mr.  Chairman? 

THE  CHAIRMAN:  Yes. 

116 


Merchant  Marine — General  Discussion 


MR.  COWLES:  Is  it  not  a  fact  that  if  the  thirty  millions 
proposed  by  the  government  bill  last  year  had  been  invested,  as 
I  understand  it  was  intended,  it  should  have  been  invested  in 
the  bonds  of  the  International  Mercantile  Marine  Company,  we 
would  have  had  one  of  the  best  fleets  upon  the  ocean  at  a  merely 
nominal  price. 

MR.  BAKER  :  It  is ;  provided  they  could  have  been  acquired ; 
but  that  it  was  agreed  to  be  done,  no.  That  it  could  have  been, 
yes.  That  would  have  given  us  an  enormous  fleet  under  the 
American  flag  at  certainly  the  very  lowest  cost. 

MR.  COWLES  :  Yes. 

MR.  BAKER:  At  the  very  lowest  cost  per  gross  ton  register, 
at  which  a  steamship  line  always  values  its  property — at  the 
lowest  price  ever  known  in  the  history  of  the  world. 

MR.  COWLES:  If  that  deal  had  been  put  through  that  fleet 
would  probably  have  been  brought  under  our  ownership  and 
management  ? 

MR.  BAKER:  Yes. 

MR.  ALEXANDER  R.  SMITH:  I  will  ask  Mr.  Baker  if  he 
does  not  know  that  it  is  a  fact  that  the  British  Government  re- 
serves the  right  in  the  British  Board  of  Trade,  that  those  vessels 
shall  remain  under  the  British  flag  until  it  consents  to  their 
going  under  another  flag? 

MR.  BAKER  :  They  did  not  at  that  time. 

MR.  ALEXANDER  R.  SMITH  :  That  was  exactly  the  contract 
executed  with  the  line  thereafter,  when  Mr.  Morgan  purchased 
the  ships — 

MR.  BAKER:  No;  I  signed  that  contract. 

MR.  ALEXANDER  R.  SMITH  :  That  proviso  was  that  the  vessels 
were  not  to  depart  from  the  British  flag  unless  the  British  Board 
of  Trade  consented. 

MR.  BAKER:  That  applied  to  four  steamers  only. 

MR.  COWLES:  And  were  those  ships  not  American  owned 
ships  ? 

MR.  BAKER:  They  were  American  owned  ships. 

MR.  COWLES:  Absolutely. 

MR.  BAKER:  Owned  by  an  American  company  incorporated 
under  the  laws  of  the  State  of  New  Jersey. 

MR.  COWLES:  And  they  could  have  been  brought  under  the 
American  flag  if  that  proposition  I  mentioned  had  been  carried 
through.  They  could  have  been  put  under  the  American  flag 

117 


Second  Session — Monday  Ajternoon 


and  used  by  the  American  people  if  Senator  Weeks  had  not 
prevented  its  consummation. 

MR.  BAKER:  An  exactly  similar  condition  prevailed  as  to 
all  ships  that  were  transferred  owned  by  the  United  States  Steel 
Corporation,  the  Standard  Oil  Company,  the  United  Fruit  Com- 
pany, which  were  owned  by  companies  in  foreign  countries,  in 
most  cases  controlling  interests. 

MR.  COWI,ES:  Exactly. 

MR.  EWELL:  I  would  like  to  say  just  a  few  words  to  the 
gentlemen  present.  This  is  a  commercial  organization,  and  I 
know  as  merchants  you  gentlemen  are  all  looking  for  something 
to  take  hold  of  this  question  that  will  take  care  of  it  under  the 
present  practice.  Everybody  wants  to  see  this  matter  taken  out 
of  politics,  if  possible.  There  has  only  been  just  one  proposi- 
tion offered  within  the  last  year  that  can  be  possibly  put  through, 
and  that  is  the  proposition  backed  by  the  Government.  (Ap- 
plause.) 

What  we  want  is  the  movement  of  the  enormous  amount  of 
freight  that  is  now  congesting  the  centers  with  over  40,000  car- 
loads that  cannot  be  moved.  What  we  want  is  the  means  to 
take  care  of  that  crisis.  No  private  capital  can  do  it.  No 
private  capital  will  do  it.  There  was  also  the  proposition  sug- 
gested by  our  friend,  Mr.  Douglas,  this  afternoon,  that  it  be 
turned  over  in  the  first  instance  to  private  enterprise — although 
he  finally  did  come  to  the  Secretary's  solution  of  the  situation, 
which  is  the  real  one,  that  you  cannot  meet  this  question  without 
the  assistance  of  the  Government  and  with  private  capital,  with- 
out putting  up  a  subsidy  of  $25,000,000.  France  has  had  to  give 
$13,600,000;  Great  Britain,  $9,689,000  subsidy,  and  they  are 
capable  of  manning,  building  and  operating  ships  for  40  per 
cent,  less  than  the  United  States  can  do  it;  so  how  in  the  name 
of  heaven  can  you  get  sensible  business  men  to  talk  on  that 
proposition  ? 

The  only  solution  of  it  is  the  Government,  with  capital  be- 
hind it,  that  can  go  ahead  and  either  buy  or  build  ships  in  suf- 
ficient numbers  to  handle  the  proposition,  which  I  consider  the 
greatest  crisis  that  has  ever  confronted  the  American  people. 

CAPTAIN  WHITE  :  I  would  like  to  beg  consideration  for  just  a 
moment. 

The  building  of  ships  to  relieve  the  present  crisis  is  not 
practicable.  The  crisis  will  be  over  before  the  ships  are  built. 
The  only  possible  solution  by  which  ships  can  be  obtained  for 

118 


Credit  Reports — Introductory  Remarks 


immediate  use  is  the  purchase  of  ships  that  are  interned  in  our 
harbors.  If  the  Government  of  the  United  States  purchases  the 
German  ships  that  are  in  our  ports  it  will  seriously  imperil  our 
relations  with  the  allied  governments. 

MR.  EWELL  :  That  is  all  moonshine.     It  cannot  be  done. 

CAPTAIN  WHITE  :  Or  else  they  will  violate  international  law 
and  take  the  consequences  later. 

THE  CHAIRMAN  :  Gentlemen,  I  desire  to  make  an  announce- 
ment of  the  meeting  this  evening  which  will  be  entirely  informal, 
but  I  am  sure  will  be  interesting,  in  the  matter  of  credits  abroad, 
foreign  credits;  also  that  the  chair  will  be  occupied  tomorrow, 
during  both  sessions,  by  Theodore  C.  Search  of  Philadelphia. 
Mr.  Search  was  President  of  the  National  Association  of  Man- 
ufacturers from  1896  to  1902,  and  it  was  during  his  administra- 
tion that  the  foreign  trade  work  of  the  Association  was  inau- 
gurated. 

Gentlemen,  the  floor  is  still  open  for  discussion. 

It  is  evident  that  the  discussion  has  been  concluded,  and 
the  meeting  stands  adjourned. 

Before  you  go  I  want  to  announce  that  Consul-General 
Sammons,  of  Shanghai,  will  be  present  at  times  during  the  ses- 
sions of  this  Conference,  and  will  be  very  glad  indeed  to  meet 
gentlemen  here  and  give  them  any  information  that  they  wish 
to  have  regarding  that  part  of  the  world. 

(Whereupon,  at  5:45  o'clock  p.m.  a  recess  was  taken  until 
8:15  o'clock  p.m.) 


THIRD  SESSION 

Monday  Evening,  December  6,  1915 

The  Conference  was  called  to  order  at  8:15  o'clock  P.M., 
Mr.  J.  H.  Tregoe  (Secretary  of  the  National  Association  of 
Credit  Men,  New  York)  in  the  chair. 

THE  CHAIRMAN:  Gentlemen,  as  this  a  conference  we  hope 
to  make  it  absolutely  informal.  It  is  a  very  difficult  matter, 
with  such  a  large  number  of  conferees,  to  mellow  it  as  we  should 
like  to,  but  if  everyone  will  just  consider  that  he  is  a  unit  of 
the  conference,  with  absolute  liberty  to  speak,  to  question,  to 
comment,  we  will  use  the  time  very  profitably ;  and  that  is  what 
we  want  to  do  tonight. 

110 


Third  Session — Monday  Evening 


I  feel  that  most  of  us  here  are  anxious  for  education  upon 
this  rising  topic  of  interest,  foreign  credits. 

I  have  not  hesitated,  gentlemen,  in  presenting  ideas  and 
thoughts  upon  the  credit  problem  to  say  that  the  great  question 
before  the  world  is  credit. 

In  the  crises  of  the  world's  history  various  questions  have 
been  prominent,  but  now  the  great  question  is  credit. 

We  have  developed  domestic  credits  in  a  very  systematic 
fashion,  yet  we  have  not  wrought  a  science  so  that  all  com- 
mercial credit  granters  are  feeling  the  influence  of  and  are  con- 
trolled by  certain  established  rules.  That  education,  however, 
is  advancing,  and  now  arises  in  our  economy,  brought  about  by 
the  force  of  circumstances,  this  great  question  of  foreign  credit— 
an  unscratched  surface;  and  we  are  here  tonight  by  the  force 
of  our  individual  thought  and  ideas  to  help  to  blaze  the  way. 

Those  are  the  only  remarks  I  intend  to  make  in  opening  this 
conference.  But,  gentlemen,  will  you  feel  the  power  of  this 
thought?  Will  you  yield  yourselves  to  it?  And  do  not  hesitate 
as  the  idea  comes  to  you,  as  you  are  led  by  the  spirit,  perchance, 
to  say  your  say. 

We  have  adopted  tonight  no  definite  program,  but  we  are 
going  to  study  this  subject  from  three  different  angles  which 
we  will  announce  a  little  later. 

In  a  meeting  so  large  as  this  we  must  be  very,  very  orderly ; 
we  must  be  systematic. 

I  feel  that  the  first  pleasure  devolving  upon  me  is  to  present 
him  who  has  out  of  his  experience  and  out  of  his  own  mind 
largely  wrought  this  International  Trade  Conference.  We  should 
like  very  much  to  have  a  few  words  from  the  Secretary,  Mr. 
Benney.  (Applause.) 

MR.  BENNEY  :  Gentlemen,  as  the  Chairman  has  told  you,  this 
is  a  very  informal  meeting  and  I  do  not  know  of  anyone  that  has 
prepared  a  set  address  or  speech. 

Wre  are  here  representing  not  only  the  National  Association 
of  Manufacturers  but  other  organizations  which  are  deeply  in- 
terested in  this  subject,  to  afford  you  information,  to  answer 
questions  truly  and  frankly  and  also,  I  think,  to  correct  im- 
pressions which  I  fear  some  of  our  writers  on  export  trade  sub- 
jects have  erroneously  given — that  it  is  very  difficult  to  get  in- 
formation on  the  reliability  of  foreign  business  houses.  That, 
I  think,  is  a  very  wrong  impression. 

It  may  not  be  quite  so  easy  in  all  countries  to  get  informa- 

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tion  on  foreign  houses  as  it  is  to  get  similar  information  in  the 
United  States,  but  if  you  will  take  a  little  pains,  a  little  trouble, 
and  if  you  are  willing  to  go  to  a  reasonable  expense,  you  can 
get  with  very  little,  comparatively  small,  expense  all  the  informa- 
tion you  need  to  trade  successfully  and  freely  with  the  majority 
of  established  business  houses  in  every  country  of  the  commercial 
world. 

If  it  is  thought  that  there  are  no  sources  of  information  open 
to  you,  or  you  are  not  acquainted  with  them,  you  have  in  the 
first  place  two  very  large  organizations,  commercial  agencies, 
which  have  not  only  a  national  reputation  but  a  world-wide  repu- 
tation. I  do  not  know  how  many  years  they  have  been  estab- 
lished in  the  business,  but  before  I  was  born — and  I  was  born 
a  good  many  years  ago. 

You  have,  in  addition  to  those  agencies,  organizations  which 
are  not  established  for  commercial  profit  but  simply  for  provid- 
ing you  with  information  on  a  mutual  basis.  One  of  them  was 
born  in  Philadelphia;  the  other  was  bred  there:  the  Philadelphia 
Commercial  Museum  and  the  National  Association  of  Manufac- 
turers. Both  of  them  have,  for  about  twenty  years,  been  se- 
curing and  giving  information  on  foreign  business  houses  the 
world  over,  and  that  service  has  been  developed  from  year  to 
year,  and  I  think  now,  so  far  as  the  National  Association  of 
Manufacturers  is  concerned,  we  can  guarantee  to  supply  you 
with  reliable  reports  on  firms  in  any  commercial  city  of  the 
civilized  world,  and,  to  some  extent  in  so-called  barbaric 
countries. 

As  to  the  means  of  getting  those  reports — there  is  no  secret 
about  it — we  use  in  our  work  the  banks,  agencies  with  which  we 
are  affiliated,  special  correspondents,  business  men,  lawyers,  state- 
ments which  the  foreign  houses  themselves  will  give  to  us  very 
freely  when  they  would  not  give  them  to  their  neighbors,  and  the 
testimony  of  trade  connections  at  home  and  abroad  of  the  firms 
inquired  about.  In  this  work  there  is  among  the  members  of  the 
National  Association  of  Manufacturers  a  very  cordial  spirit  of 
cooperation  and  willingness  to  afford  information  regarding  for- 
eign customers  which,  to  me,  in  some  cases  is  surprising  as  well  as 
gratifying. 

In  these  ways  we  are  able  to  give  and  furnish  information 
which  has  been  the  means  of  many  firms  establishing  themselves 
in  foreign  trade  and  in  other  cases  of  developing  that  trade  for 
those  already  started  therein. 

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Third  Session — Monday  Evening 


I  do  not  wish  to  make  any  set  address.  We  are  here  to 
answer  questions  and  give  information,  freely  and  frankly. 
Thank  you.  (Applause.) 

THE  CHAIRMAN  :  Gentlemen,  not  as  an  item  on  our  program  at 
all,  but  one  of  those  happy  little  affairs  which  I  think  we  can  always 
introduce  even  into  an  informal  conference:  I  think  we  should 
see  the  gentleman  whom  some  of  you  saw  today,  who  is  President 
of  the  National  Association  of  Manufacturers.  I  think  we  should 
do  him  a  little  honor  tonight,  because  it  is  under  the  auspices  of 
that  Association  that  this  Conference  has  been  held. 

May  I  take  the  pleasure  and  privilege  of  introducing  to  you 
Colonel  George  Pope,  President  of  the  National  Association  of 
Manufacturers.  (Applause.) 

MR.  POPE  :  Mr.  Chairman  and  gentlemen :  After  I  have  been 
before  you  all  day  it  does  not  seem  quite  proper  for  the  Chairman 
in  the  evening  to  trot  me  out  again.  I  do  not  know  why  he  did  not 
begin  with  my  predecessors,  presidents  of  the  Association,  two  of 
whom  are  present  here  this  evening.  They  go  further  back  into  the 
history  of  the  Association  than  I  do,  and  could  tell  you  more 
about  it. 

I  want  to  say  that  I  am  extremely  gratified,  as  all  the  officers 
of  the  National  Association  of  Manufacturers  are  today,  with 
the  success  of  the  first  day  of  this  Conference. 

There  have  been  some  very  valuable  and  instructive  papers 
read  here  today.  Undoubtedly,  many  of  you  who  are  here  this 
evening  heard  them.  I  am  particularly  gratified,  I  wish  to  say, 
with  the  attendance  here  this  evening ;  for  I  thought  very  probably 
after  an  all-day  session  the  attendance  might  be  a  little  thin  tonight. 
I  think,  however,  it  is  greater  than  it  has  been  at  any  time  during 
today.  And  I  am  sure  that  the  discussion  here  tonight  on  the  sub- 
ject of  Foreign  Credits  will  prove  instructive  and  interesting  to 
all  who  are  here. 

I  congratulate  those  of  the  National  Association  of  Manu- 
facturers, and  particularly  the  Secretary  of  the  meetings,  who 
is  largely  responsible  for  the  success  of  this  Conference,  on  the 
attendance  here  and  the  interest  that  has  been  manifested. 

Mr.  Chairman  and  gentlemen,  I  thank  you.  (Applause.) 

THE  CHAIRMAN  :  The  President  of  the  Association  evidenced 
very  clearly  that  he  had  not  before  fallen  within  the  autocracy 
of  the  Chairman  of  the  evening.  It  is  only  an  indication  of  what 
some  of  you  may  expect  unless  you  pipe  up  very  quickly ;  because 
we  do  not  "intend  that  any  of  the  precious  moments  of  this  Con- 

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ference  shall  be  lost.  I  have  some  of  you  spotted,  and  you  need 
not  be  surprised,  if  there  is  any  pause,  should  I  call  on  you. 
We  are  going  to  have  this  absolutely  informal.  Before  we  pro- 
ceed to  the  announcement  of  the  topics  there  is  a  gentleman  who 
came  in  while  Colonel  Pope  was  talking,  whom  I  want  to  intro- 
duce to  you  for  just  a  few  words  of  greeting,  because  of  his 
great  interest  in  this  foreign  credits  work. 

I  take  great  pleasure  in  presenting  to  you  Mr.  Gonzales,  of 
the  Foreign  Trade  Department  of  the  National  Association  of 
Manufacturers. 

MR.  GONZALES:  What  do  you  want  me  to  say? 

THE  CHAIRMAN  :  Anything  you  please,  just  so  you  say  it  in 
a  brief  time.  (Laughter.) 

MR.  GONZALES:  But  the  subject,  if  you  please? 

THE  CHAIRMAN  :  We  are  not  on  any  subject  yet.  You  are 
to  present  your  greetings  and  tell  these  gentlemen  how  glad  you 
are,  how  pleased  you  are.  (Laughter.) 

MR.  GONZALES:  I  cannot  say  that.  I  cannot  find  words  to 
fully  express  it.  (Laughter.) 

We  have  under  discussion  the  means  of  securing  foreign 
information  about  credits.  You  will  pardon  me  if  I  start  off  by 
saying  that  the  National  Association  of  Manufacturers  has,  I 
would  say,  the  best  equipped  system  for  furnishing  credit  in- 
formation about  every  country  in  the  world.  We  have  eighteen 
hundred  correspondents,  through  whom  we  secure  information 
about  the  standing,  the  morality,  and  so  forth,  of  the  merchants 
and  institutions  all  over  the  world.  We  have  been  doing  that 
for  a  period  of  twenty  years,  and  we  are  very  happy  to  say  that 
we  do  not  know  of  anybody  who  has  lost  money  through  mis- 
information secured  through  us. 

Of  course,  as  you  know,  everybody  is  expected  to  make 
mistakes,  and  we  depend  on  the  information  we  get,  on  the 
opinion,  more  than  anything  else,  of  the  people  of  other  countries. 

I,  however,  do  not  attach  a  great  deal  of  importance  to  that, 
because  the  means  a  man  has  is  of  very  much  less  value  than 
what  that  man  is  worth  himself.  I  have  known  people  with  very 
little  resources  who  were  much  better  than  the  people  who  had  a 
great  deal  of  money.  I  have  never  seen  the  sense  of  limiting 
the  credit  of  a  man  to  so  many  hundred  or  so  many  thousand 
dollars.  I  never  knew  why  a  man  was  good  for  $2,500  and  not 
for  $2,600;  and  I  never  believed  that  the  limitation  of  credit  of 

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Third  Session — Monday  Evening 


a  man  should  be  other  than  his  own  common  sense;  because  I 
classify  the  people  in  the  world  into  three  classes:  the  honest 
people,  the  crooks,  and  something  worse  than  the  crook,  that  is, 
the  honest  fool  (laughter),  the  man  that  buys  more  than  he  can 
dispose  of,  the  man  that  does  not  know  his  business,  in  fact,  the 
man  who  is  a  fool.  He  does  not  lose  money  because  he  is  dis- 
honest, but  simply  because  he  is  a  fool;  and  your  money  is  just 
as  much  in  danger  of  being  lost  with  him  as  if  you  were  dealing 
with  a  man  of  bad  faith.  In  every  country  of  the  world  you  have 
the  three  classes,  and  since  the  war  started  the  character  of  the 
people  has  remained  unchanged.  The  people  who  would  pay 
before  the  war  are  paying  now.  There  has  been  no  reason 
whatever  to  change  our  attitude  in  respect  to  those  people. 
Those  people  who  cannot  pay,  or  who  think  they  cannot  pay,  they 
will  not  buy,  but  the  man  who  buys  and  who  is  honest  is  worth 
any  amount  of  money,  now  as  before  the  war.  The  moratoriums 
declared  in  almost  every  country,  the  high  rates  of  exchange,  or 
the  lack  of  exchange  in  many  countries  have  not  prevented  the 
good  people  from  paying.  I  never  saw  the  sense  of  the  excuse 
that  because  the  rate  of  exchange  was  high  a  man  should  delay 
payments.  If  the  rate  of  exchange  is  high,  the  price  of  the 
goods  is  higher,  and  the  merchant  does  not  make  the  loss;  it 
is  the  public  who  make  the  loss,  and  this  earthquake,  as  some- 
body described  it  this  morning,  this  economic  earthquake  that 
the  war  has  brought  about,  has  served  to  establish  discrimination 
between  the  good  people  and  the  bad  people  All  those  merchants 
who  were  in  a  weak  financial  situation  have  gone  to  pieces,  and 
those  people  who  are  subsisting  today  and  are  good,  are  good 
for  any  amount  of  money. 

I  believe  that  the  question  of  most  importance  at  this  time, 
not  only  in  this  country  but  all  over  the  world,  is  the  matter  of 
credit.  But  I  had  reserved  speaking  about  this  until  tomorrow, 
and  if  I  say  it  now  I  will  not  have  anything  to  say  tomorrow. 
(Laughter.)  So  you  will  excuse  me,  Mr.  Chairman,  if  I  cut  my 
remarks  short  at  this  point.  (Laughter  and  applause.) 

THE  CHAIRMAN:  I  really  thought  we  were  in  for  a  long 
speech.  (Laughter.) 

Now,  gentlemen,  those  are  all  of  the  felicitations  we  are 
going  to  indulge  in  tonight,  because  the  time  is  passing  and  we 
want  to  get  down  to  our  real  work.  We  want  to  get  down  to  the 
true  inwardness  of  this  question.  We  have  divided  it  into  three 

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Information  Needed  in  Credit  Reports 


subjects,  and  will  you  note,  please,  so  that  we  shall  talk  to  each 
subject,  and  not  overlap  or  confuse,  just  what  those  subjects  are. 

The  first  is  the  character  of  information  that  is  necessary 
and  desirable  in  the  extension  of  foreign  credits. 

The  second  is  the  means  for  assembling  that  information. 

The  third  is  cooperation  between  foreign  credit  granters. 

There  may  be  subdivisions  under  those  three  general  topics, 
but  I  feel  if  we  talk  to  those  tonight  and  confine  our  thoughts  and 
our  expressions  to  them  systematically  that  we  shall  have  per- 
formed a  very  distinct  forward  work  in  our  exposition  of  this 
subject,  in  reaching  certain  safe  anchorages  in  the  foreign  field. 

Now,  gentlemen,  the  first  subject  is  the  character  of  in- 
formation that  is  desirable  and  necessary  in  the  extension  of 
foreign  credits. 

The  Conference  is  open,  so  speak  quickly,  speak  briefly,  and 
announce  your  name  as  you  rise  to  your  feet. 

This  first  topic  is  one  of  interest  to  the  credit  man  and  also 
the  sales  manager  may  have  a  word  to  say  on  it — the  export 
sales  manager.  Let  us  get  at  it  very  quickly. 

I  do  not  want  to  call  on  anyone. 

MR.  F.  S.  PHILLIPS  (of  the  American  Ever-Ready  Works, 
Long  Island  City,  New  York)  : 

I  am  rising  as  the  first  one,  to  be  the  goat.  What  I  want  to 
present  is  in  the  form  of  a  question,  and  probably  a  question 
which  is  in  the  minds  of  most  of  us  who  are  here  tonight. 

The  kind  of  information — the  credit  man  and  our  system 
of  securing  credit  information,  it  seems  to  me,  look  first  to  the 
financial  statement.  A  man  wants  credit.  The  first  thing,  as 
far  as  my  knowledge  goes,  which  is  limited  on  credit  matters,  is : 
''What  is  his  situation?  How  much  money  has  he  got?"  and  the 
rest  of  it.  That,  you  will  find,  presumably,  in  a  financial  state- 
ment. 

It  is  well  enough  in  this  country.  We  can  secure  it.  We 
can  ask  for  it.  We  can  write  for  it.  We  can  demand  it,  and  we 
can  get  it  in  every  case  where  a  man  is  entitled  to  credit  con- 
sideration. 

In  foreign  countries,  however,  particularly  in  the  Latin- 
American  countries,  in  which  I  am  primarily  interested,  it  is 
almost  an  impossible  thing  to  get  a  financial  statement  unless  that 
business  man  has  been  in  contact  with  the  American  ways  of 
doing  business,  and  then  he  will  realize  why  such  a  statement  is 

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Third  Session — Monday  Evening 


wanted;  but  the  Latin-American  character,  so  far  as  my  limited 
knowledge  of  that  goes,  is  such  that  it  is  taken  as  an  offense 
when  the  requisite  questions  are  asked  with  which  to  make  up 
a  financial  statement.  He  cannot  understand  why  we  want  to 
pry  into  his  personal  affairs. 

If  we  must  have  that  financial  statement,  which  seems  at 
least  on  the  surface  to  be  essential,  how  are  we  going  to  get  it? 
How  are  we  going  to  secure  it?  If  his  frame  of  mind,  if  the 
customs  of  the  Latin-American  countries,  particularly,  are  such 
that  you  cannot,  without  offense,  ask  for  that  financial  statement, 
what  is  the  first,  the  prime  essential  unit  of  information  which 
we  must  ask  for,  which  we  must  secure  in  place  of  that?  Do  I 
make  my  thought  clear?  Do  I  present  my  thought  clearly,  Mr. 
Chairman  ? 

THE  CHAIRMAN  :  I  think  so.  I  think  we  understand  it ; 
that  is  something  to  talk  about  now.  I  would  like  to  ask  those 
present  who  have  lived  among  the  foreign  merchants,  who  are 
native  of  foreign  countries,  to  speak,  and  tell  us  something  about 
the  characteristics  of  those  countries,  the  elements  which  enter 
into  safety  of  credit  risks  in  those  countries,  as  differing  from  the 
elements  which  enter  into  the  safety  of  our  domestic  credits. 

Who  is  the  next  gentlemen  who  will  speak?  Let  us  get 
ahead  just  as  quickly  as  we  can. 

MR.  MONTT:  I  have  lived  in  South  America  for  nineteen 
years.  I  find  that  credit  information  is  very  hard  to  secure,  as 
Mr.  Phillips  said  a  moment  ago.  I  find,  however,  that  by  carry- 
ing on  a  campaign  in  the  proper  way  and  pointing  out  to  the 
South  Americans  diplomatically  the  benefits  which  are  to  be 
derived  from  giving  out  credit  information,  they  will  give  it 
and  we  can  get  it  just  as  satisfactorily  as  we  can  in  this  country. 
The  point  is  this:  In  this  country  we  secure  credit  statements, 
financial  statements,  and  if  these  are  false,  it  is  a  criminal  act. 
The  man  that  gives  out  a  false  statement  is  liable  to  imprisonment. 
The  laws  in  South  America  do  not  have  any  penalty  for  the  man 
that  gives  out  a  false  statement,  and  if  they  do,  the  process  of 
getting  redress  against  such  man  is  so  long  and  tedious  that  I 
would  say  in  ninety-nine  cases  out  of  a  hundred  the  merchant 
would  rather  let  it  go. 

I  find,  however,  that  by  writing  to  these  men  that  are  doing 
business  in  South  America — I  have  done  a  little  bit  of  this  for 
the  clients  of  our  organization — and  explaining  the  matter  to  them 

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Information  Needed  in  Credit  Reports 


in  a  sort  of  a  diplomatic  way,  appealing  to  their  sense  of  fair 
dealing,  telling  them,  "now,  if  you  were  dealing  with  an  unknown 
concern,  you  would  like  to  know  something  about  it,  and  perhaps 
this  is  what  you  would  like  to  know/'  better  results  are  secured ; 
and  I  have  made  up  a  set  of  questions  in  which  I  ask  the  man 
how  long  his  store  has  been  founded,  how  long  he  has  been  in 
business,  and  so  on,  just  to  get  him  started  to  answer  those 
questions,  and  have  had  very  satisfactory  results. 

As  I  say  again,  the  point  is  whether  that  man  will  be  truth- 
ful in  his  information.  We  can  check  him  up  by  going  to  his 
bank — and  that  is  another  of  the  questions  I  ask  him:  "Where 
do  you  put  your  money  ?  Which  are  the  banks  where  you  deposit 
your  money?" 

As  Mr.  Phillips  said,  the  South  American  merchant  usually 
considers  it  an  insult  for  anybody  to  come  and  ask  him  how 
much  he  is  good  for.  But  it  seems  to  me  that  much  of  this  in- 
formation can  be  secured  in  the  American  way.  The  agencies 
that  secure  credit  information  usually  send  a  man  down  there 
who  is  imbued  with  the  American  spirit,  and  perhaps  he  does  not 
get  at  the  man  in  the  proper  way.  I  do  not  believe  the  informa- 
tion as  to  character  and  morals  is  very  good.  Sometimes  that 
information  leads  to  wrong  conclusions. 

I  told  the  Chicago  Association  of  Credit  Men  a  little  incident 
that  happened  to  come  to  my  knowledge  regarding  a  firm  in 
Buenos  Aires. 

A  manufacturer  of  certain  machinery  wanted  credit  informa- 
tion about  a  firm  in  Buenos  Aires  which  was  run  by  two  partners. 
One  of  the  credit  information  bureaus  sent  resident  American 
agents  to  Buenos  Aires  to  get  the  information.  The  man  in  the 
office  when  told  of  the  purpose  of  his  errand  felt  offended,  and, 
as  he  said  to  me,  he  was  pretty  nearly  kicked  out  of  the  office. 

Now,  this  man  had  made  the  acquaintance  of  the  bookkeeper 
of  the  concern,  and  that  man  advised  him  to  go  and  make  a 
social  call  on  the  other  partner  that  evening  and  get  the  informa- 
tion in  that  way. 

So  this  American  representative  put  on  his  dress  clothes  and 
went  to  the  house  of  the  other  partner  that  night,  and  he  said 
that  when  he  rang  the  bell  he  heard  an  awful  screaming  inside 
the  house.  He  rang  the  bell  and  a  very  excited  looking  woman 
came  to  the  door.  He  asked  her  if  the  master  of  the  house  was 
in  and  if  he  could  be  seen.  She  said,  "Yes,  he  is  in,  but  he  can- 

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not  be  seen.  At  the  present  time  he  is  beating  his  wife." 
(Laughter.)  That  man,  disgusted  with  the  morning's  experience, 
and  more  disgusted  with  the  night' s  experience,  sent  a  report  to 
this  country  saying  that  a  concern  run  by  men  of  such  low 
morals  and  character  could  not  be  reliable.  I  found  out  about 
this  concern,  however,  and  I  know  that  they  are  reliable.  I 
know  they  would  not  go  back  on  a  bill,  if  they  had  to  part  with 
their  shirts  to  pay  it.  But  I  presume  that  this  man  that  was 
beating  his  wife  had  another  standard  of  morals.  (Laughter.) 

In  South  America  we  have  a  very  common  saying  that  a 
wife  is  like  a  cocktail,  the  more  you  beat  it  the  better.  There- 
fore, I  suppose  this  man  was  doing  the  beating  in  the  conscious- 
ness that  he  was  doing  a  good  thing.  (Laughter.) 

I  am  telling  this  story  to  point  out  one  thing,  and  that  is 
that  we  cannot  judge  the  South  American  customer  or  the 
South  American  merchant  by  American  standards,  and,  as  Mr. 
Gonzales  said,  we  will  have  to  rely  more  on  the  opinions  of 
the  neighbors  and  the  merchants  that  have  dealt  with  the  man 
before ;  and  it  seems  to  me  that  it  would  be  a  mighty  good  thing 
for  this  Conference  to  standardize  the  statements  that  are  to 
be  given  out  by  the  South  American  merchants  so  that  we  can 
tell  definitely  and  in  a  reliable  way  their  backing  or  their  busi- 
ness and  so  on. 

I  do  not  know  whether  I  have  taken  more  than  my  five 
minutes  or  not,  but  that  is  the  point  I  wanted  to  bring  out. 

THE  CHAIRMAN:  That  has  been  very  interesting,  because 
it  has  brought  out  one  point  that  we  wanted  to  make  prominent 
here.  We  wanted  to  arrive  at  the  standard,  so  that  we  can 
judge  foreign  credits  properly,  because  we  do  not  believe  that 
our  own  standards  will  be  the  safe  guides  in  all  cases.  That  is 
what  we  wanted  to  bring  out  in  the  Conference,  with  a  view  to 
helping  us  ascertain  what  steps  should  be  taken  to  meet  these 
problems. 

I  have  a  card  from  a  gentleman  who  desires  to  say  a  few 
words,  but  my  Welsh  tongue  will  not  permit  me  to  pronounce 
his  name.  Therefore,  I  will  say  that  the  gentleman  whose  name 
is  on  this  card  which  I  have  here  desires  to  say  a  few  words. 

BARON  JACQUES  DE  NEUFLIZE  (of  Paris,  France) :  My 
name  is  Jacques  de  Neuflize. 

THE  CHAIRMAN:  Now,  wouldn't  I  have  had  a  fine  time 
trying  to  pronounce  that?  (Laughter.)  I  know  when  I  strike  a 
snag.  (Laughter.) 

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BARON  DE  NEUFLIZE  :  I  am  sorry  to  have  a  name  which  is  so 
difficult  to  pronounce.  Next  time  I  will  try  to  have  it  mended  a 
little. 

You  will  perhaps  excuse  me  for  saying  a  few  words,  and 
make  allowances  for  my  English,  because  I  have  not  prepared 
any  set  statement.  I  simply  desire  to  say  that  I  am  very  much 
interested  in  this  question  of  information,  because  I  have  very 
frequently  seen  misunderstandings  arise  between  my  American 
friends  and  the  people  of  whom  they  were  seeking  information. 
You  have  your  customs  here  and  other  countries  have  other 
customs.  In  the  New  York  way,  or  the  American  way,  you 
have  a  very  good  plan  of  asking  your  information.  You  ask 
everything  about  a  man.  You  ask  his  age,  how  much  money  he 
has  got,  and  if  he  has  all  his  teeth.  (Laughter.)  When  you  have 
got  that  information  from  reliable  sources,  or  if  you  have  a 
signed  statement  of  the  man,  and  you  believe  that  the  man  giving 
the  signed  statement  is  reliable,  it  is  all  right. 

There  are  countries,  however,  where  different  methods  are 
required,  and  most  of  the  European  countries  are  in  this  cate- 
gory— most  of  the  South  American  countries,  and  even  my  own, 
who  are  Latins,  too,  or  so  we  call  ourselves,  though,  perhaps, 
through  a  greater  contact  with  our  Anglo-Saxon  friends,  our 
skin  is  not  quite  so  delicate.  But  there  are  many  of  the  ques- 
tions which  are  everyday  incidents  of  the  American  plan  of  se- 
curing a  financial  statement  to  which  the  people  of  other  nations 
are  not  accustomed.  I  know  very  many  very  good  firms  in  other 
countries  who,  when  they  are  asked  to  furnish  a  statement  in 
your  own  way,  will  say  that  it  is  really  too  indiscreet;  that  you 
ask  too  much,  and  they  refuse  to  give  it.  If  they  are  no  good, 
they  will  give  it,  but  then  you  cannot  rely  very  much  on  their 
statements.  (Laughter.) 

What  I  wanted  to  say  is  this:  In  order  to  secure  correct 
and  accurate  information  in  regard  to  a  prospective  customer 
or  a  merchant  in  a  foreign  country,  you  must  first  try  to  get 
at  the  standard  of  the  country  with  which  you  are  dealing. 
There  are  places  where  a  man  with  a  fortune  of  $25,000  or  $5,000 
is  good,  if  he  does  a  small  business  and  is  honest,  and  elsewhere 
he  is  not.  So  that  you  must  find  out  what  is  the  average  capital 
used  in  the  business ;  and  especially,  if  you  go  to  little  countries, 
try  to  find  out  the  comparative  standing  of  the  man.  The  man 
who  is  the  first  in  his  country  is  generally  good,  even  if,  according 
to  our  ideas,  he  may  not  seem  very  good ;  because,  being  the  first, 

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Third  Session — Monday  Evening 


he  will  have  his  reputation  to  sustain,  and  will  have  the  con- 
fidence of  his  own  people,  even  if  the  others  do  not. 

It  must  be  realized  also  that  the  element  of  politeness  is  of 
great  importance  in  certain  countries.  You  will  find  politeness 
even  in  statements  issued  by  one  man  on  another,  so  that  that 
is  an  item  that  must  not  be  overlooked.  In  our  plain  way  of 
talking,  we  may  perhaps  say,  in  answer  to  an  inquiry:  "Better 
not  do  business,"  or  something  of  that  kind;  something  very 
plain.  In  other  places  that  kind  of  a  report  would  not  be 
acceptable,  because  it  is  not  polite.  They  feel  that  you  should 
understand  their  manners  and  customs  in  doing  business. 

I  have  been  much  in  South  America  and  in  countries  where 
I  have  received  fine  receptions.  Sometimes  my  friend  will  say 
to  me,  "My  house  is  yours/'  That  is  just  politeness.  They 
mean  it  in  a  polite  way.  You  will  find  the  same  principles  in 
the  statements  of  information.  Do  not  believe,  simply  because 
you  have  information  as  to  the  proper  methods  to  be  applied 
in  one  country,  that  they  will  apply  uniformly  to  all.  Look  at  the 
place  itself,  and  try  to  get  a  few  points  of  comparison  and  see 
if,  by  making  use  of  these  points  of  comparison,  you  cannot  get 
an  accurate  statement,  and  a  very  fair  knowledge  of  what  you 
really  want  to  know,  that  is,  the  standing  and  responsibility  of  the 
man  with  whom  you  are  to  deal,  and  your  chance  of  being 
repaid,  and  what  he  has  got.  (Applause.) 

THE  CHAIRMAN  :  I  think  I  must  say  in  your  behalf  that  that 
was  perfectly  splendid.  We  thank  our  friends  from  abroad  for 
having  spoken  to  us  so  directly  upon  the  subject.  It  is  warming  up 
now.  Who  is  the  next  speaker  on  this  subject? 

MR.  SOSNAWSKI:  I  can  beat  the  name  of  the  last  speaker. 
My  name  is  Sosnawski.  (Laughter.) 

I  come  from  Warsaw,  Russian  Poland,  that  country  of  great 
hospitality,  where  we  are  receiving  the  Russians  with  open  arms, 
and  then  the  Austrians  and  Germans — so  hospitable  that  we  have 
no  houses  for  ourselves  now,  neither  anything  to  eat. 

Coming  down  to  the  trade  situation,  however ;  if  you  want  to 
sell  to  somebody  you  must  go  into  trade.  You  must  have  some 
kind  of  an  organization  to  look  after  this  trade.  I  think  the 
Germans  are  the  best  traders,  because  they  are  willing  to  go  into 
the  trade. 

Take  Poland  and  Russia,  for  example.  They  have  their  own 
organization  to  look  after  the  possibilities  of  creating  trade  there. 
They  did  not  satisfy  themselves  by  what  the  merchant  said  about 

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himself,  or  whether  the  merchant  beat  his  wife  or  not.  They 
just  got  the  information  through  their  system  of  agencies.  I 
think  if  the  American  manufacturers  want  these  foreign  markets 
they  must  work  for  them  on  the  same  lines  as  the  Germans  have 
used  in  developing  their  foreign  trade. 

Different  countries  require  different  credits.  In  Russia  we 
are  accustomed  to  up  to  nine  months'  credit,  and  even  a  year. 
The  Germans  granted  that  because  they  had  information  that  they 
could  do  it. 

Another  thing  that  I  would  like  to  bring  to  your  attention. 
The  best  trade  is  always  in  undeveloped  countries.  If  you  have 
undeveloped  country  you  have  not  too  much  civilization.  If  you 
have  not  much  civilization  you  must  put  the  civilization  in  this 
country.  That  is  for  you  to  do. 

Of  course,  you  cannot  just  trust  anybody  else  except  your- 
self. (Laughter.) 

As  far  as  the  length  of  credit  is  concerned,  it  all  depends 
on  the  interest  you  charge.  Of  course  the  Germans  know  they 
are  not  so  liberal  as  to  give  something  for  nothing.  It  is  also 
your  business  to  make  such  prices  that  you  can  compete,  and 
that  you  can  grant  the  credit  which  the  country  requires. 

I  beg  your  pardon  for  my  limited  English.  I  think  that  is 
all  I  wanted  to  say.  (Applause.) 

THE  CHAIRMAN:  Perhaps  there  is  another  gentleman  with 
an  unpronounceable  name  who  would  like  to  be  heard  now. 
Who  is  the  next  one? 

MR.  BROWN:  Mr.  Chairman,  my  name  is  Brown.  (Laugh- 
ter.) I  am  Secretary  of  the  American  Chamber  of  Commerce 
for  the  Levant,  with  headquarters  in  Constantinople. 

We  are  new  in  this  game  of  credits,  but  we  are  beginning 
it,  and  we  believe  that  we  can  give  a  good  service  to  the  Amer- 
ican manufacturers  along  this  line. 

I  can  appreciate  what  the  gentlemen  who  spoke  just  before 
me  said.  If  you  want  information,  you  must  get  it  yourself. 

I  know  that  it  would  be  very  difficult  for  us  to  get  informa- 
tion on  firms  located  in  Constantinople  and  in  other  parts  of  the 
Levant  if  we  take  the  information  given  us  by  the  different  na- 
tionalities there.  If  you  are  getting  information  through  a  Greek 
source,  naturally  this  source  will  give  information  which  is  fa- 
vorable to  the  Greeks.  And  the  same  would  be  true  of  the 
Armenians  and  the  other  races  of  peoples  there. 

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Third  Session — Monday  Evening 


There  are  a  great  many  ways  of  getting  information.  I  should 
say,  however,  in  general,  that  the  morality  of  a  firm  located  there 
in  the  near  east  is  perhaps  of  more  importance  than  the  actual 
amount  of  money  that  the  firm  may  have  in  the  bank. 

If  a  man  has  good  credit,  good  moral  standing  in  the  com- 
munity and  with  the  bank,  he  can  get  the  money  to  take  up  the 
goods  when  they  arrive,  or  to  pay  for  the  goods  after  he  has 
received  them;  but  if  he  does  not  have  the  moral  character,  he, 
of  course,  may  not  take  up  the  goods.  Also  the  relative  standing 
of  firms  is  very  important. 

The  larger  percentage  of  the  business  there  is  done  through 
general  importers  who,  many  of  them,  do  not  have  a  very  large 
capital.  Many  of  the  firms,  however,  have  been  established  by 
their  forefathers  and  when  once  they  have  got  a  good  reputation 
they  like  to  hold  on  to  it.  Those  old  reliable  houses  care  a  great 
deal  for  their  reputations.  Although  it  may  mean  that  they  do 
not  have,  compared  with  American  firms,  a  very  large  capital, 
yet  they  are  just  as  good  and  just  as  honest  as  the  American 
firms. 

I  know  that  it  has  been  considered  that  this  section  of  the 
world  is  a  little  bit  dangerous,  and  in  the  past  American  firms 
have  sent  out  goods  just  as  orders  come  in  on  credit  and  have 
often  been  stung;  but  there  are  a  great  many  reliable  firms  lo- 
cated in  Constantinople  and  in  Greece  and  in  Egypt  and  in  Bul- 
garia and  Roumania,  Servia  and  the  other  parts  of  that  section. 

At  the  same  time  we  look  over  his  place  of  business,  we  get 
acquainted  with  the  men,  we  try  to  size  them  up,  and  we  also 
get  their  business  standing  with  the  banks.  But  we  often  get 
in  touch  with  an  American  who  has  been  out  there  as  a  school 
teacher  or  a  missionary,  maybe  for  one  or  two  generations,  and 
we  have  those  correspondents  located  in  different  parts  of  Tur- 
key, also  in  Egypt  and  Bulgaria,  and  sometimes  through  them  we 
are  able  to  get  a  line  on  the  reliable  merchants  in  the  city,  which 
is  extremely  valuable. 

During  the  last  few  months  I  have  been  visiting  cities  in 
America,  in  the  South,  in  the  East  and  in  the  West.  I  have  been 
talking  to  firms  who  have  been  dealing  with  firms  there  in  the 
Levant,  and  I  have  made  a  note  of  the  experiences  they  have  had 
with  the  merchants  over  there. 

We  intend  in  the  future  to  be  able  to  refer  the  American 
manufacturer  or  exporter  to  American  firms  with  whom  these 
people  have  been  dealing  in  the  past. 

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Information  Needed  in  Credit  Reports 


When  I  first  came  to  New  York  I  went  around  to  a  number 
of  the  firms  here  in  New  York  and  got  them  to  tell  me  what  had 
been  their  experience  with  this,  that  and  the  other  firm  located  in 
Constantinople,  in  Greece,  or  Turkey  and  so  on,  and  made  a  note 
of  these  things,  so  that  afterwards,  when  I  had  occasion  to  give 
out  these  names,  I  could  say,  "These  people  are  agents  of  the 
American  Cotton  Oil  Company,  and  have  been  for  the  last  ten 
years,  or  eight  years  or  seven  years,"  or  whatever  it  might  be, 
or  somebody  else  might  have  been  doing  business  with  the  Corn 
Products  Refining  Company  or  with  some  agricultural  implement 
people.  Then  you  can  write  them  here  in  America,  and  can  also 
verify  any  information  you  may  have  on  them. 

Of  course  firms  are  not  started  so  quickly  out  there  as  they 
are  in  America,  as  a  usual  thing.  They  grow  up  gradually,  and 
a  firm  that  is  not  well  known  cannot,  of  course,  be  trusted  like 
an  old  established  house. 

We  are  intending  to  form  a  branch  in  New  York,  where  we 
will  have  copies  of  our  reports  as  they  are  gathered,  and  put 
them  on  file  in  our  New  York  office,  so  that  a  firm  that  may 
have  a  letter  from  a  firm  located  in  the  Levant,  without  having 
to  write  to  that  side  and  wait  six  weeks  or  two  months  for  a 
reply,  can  get  a  reply  right  here  in  this  country,  perhaps,  if  you 
are  in  New  York,  within  a  day,  or  if  you  are  outside  of  New 
York  within  a  very  few  days.  And  we,  of  the  American  Chamber 
of  Commerce,  will  be  very  glad  to  have  any  cooperation  and  be 
glad  to  cooperate  also  with  any  firms  in  the  United  States  in 
collecting  the  reports  on  the  standing  of  firms  located  in  the  near 
East.  We  believe  that  we  should  do  it,  as  a  gentleman  has  said, 
ourselves.  In  order  to  get  information  that  is  reliable,  we  must 
do  it  ourselves. 

Some  of  the  banks  out  there,  of  course,  pay  their  men  good 
salaries  for  collecting  ratings.  The  bank  we  deal  with  does,  but 
many  of  them  pay  small  salaries,  and  the  man  who  writes  up  the 
firms  will  take  a  little  baksheesh  and  write  up  a  good  report  on 
most  any  firm.  For  that  reason  you  cannot  at  all  times  rely  on 
these  reports. 

We  shall  be  glad  to  cooperate  with  you  and  to  have  your 
support  in  making  this  service  really  worth  while  to  the  American 
manufacturer  and  exporter  wishing  to  do  business  with  the  coun- 
tries of  the  near  East.  (Applause.) 

THE  CHAIRMAN:  Mr.  Brown,  will  you  answer  this  question, 
which  I  think  perhaps  is  in  the  minds  of  some  of  us:  In  the 

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Third  Session — Monday  Evening 


information  that  you  would  deem  necessary  in  reporting  upon 
a  merchant  in  the  Levant,  what  would  you  dwell  specifically  upon 
— the  moral  features  or  the  financial  features?  What  are  the 
standards,  in  other  words?  Could  you  give  us  a  sketch  of  the 
character  of  a  report  that  you  would  yourself  prepare  upon  a 
worthy  merchant  in  that  country  ?  How  would  you  word  it,  now  ? 

MR.  BROWN  :  Well,  of  course,  the  history  of  the  firm  is  very 
important. 

THE  CHAIRMAN  :  You  would  start  with  a  biographical  sketch, 
would  you? 

MR.  BROWN  :  Yes. 

THE  CHAIRMAN:  That  is  first.  Now,  what  would  you  take 
next? 

MR.  BROWN:  Perhaps  the  merchants  with  whom  he  has 
been  dealing  in  America  or  in  other  countries.  That,  of  course, 
would  come  into  a  biographical  sketch  of  the  firm. 

THE  CHAIRMAN  :  Well,  now,  what  would  you  take  next  ? 

MR.  BROWN  :  You  might  take  his  credit,  his  standing  in  the 
bank,  the  capital  that  he  is  supposed  to  have.  I  do  not  know, 
just  offhand,  whether  those  would  be  logically  the  methods  we 
would  use  or  not. 

THE  CHAIRMAN  :  How  would  you  speak  of  the  moral  risk  ? 
How  would  you  dwell  upon  that?  I  know  this  is  taking  you 
unawares,  but  I  think  this  is  what  we  would  call  clinical  work. 
(Laughter.)  We  want  to  see  what  kind  of  a  report  you  would 
write  on  a  merchant  there.  How  about  the  moral  risk? 

MR.  BROWN  :  Well,  of  course,  it  depends  largely  upon  the 
firm.  There  are  well-known  firms  in  every  city.  There  are  a 
number  of  firms  that  are,  so  to  speak,  unquestionably  good.  We 
consider  that  they  are  unquestionably  good  and  that  they  intend 
to  do  business,  as  we  say,  on  the  level  altogether.  If  a  firm  is 
well  known  like  that,  of  course,  that  should  be  stated  to  begin 
with. 

THE  CHAIRMAN:  What  authorities  would  you  use  upon 
which  to  predicate  your  report  that  the  concern  was  thought  to 
be  good?  Whom  would  you  consult? 

MR.  BROWN  :  Well,  if  there  was  a  firm  in  Constantinople  that 
had  been  there  for  some  time  and  was  well  acquainted,  I  would 
consult  them.  I  would  get  a  personal  opinion,  perhaps,  from 
other  Americans  who  had  been  there  a  long  while;  or,  if  any 
Americans  were  in  business  there,  I  would  get  their  opinion. 
Also,  we  have  friends  in  banks  whom  we  would  consult  as  to 

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Information  Needed  in  Credit  Reports 


their  standing.  Naturally,  I  would  consult  the  consul  or  the 
consul-general  and  ask  for  his  personal  opinion — not  officially 
at  all. 

THE  CHAIRMAN:  In  sizing  up  your  report,  in  making  your 
final  sizing  up  in  the  report,  do  you  depend  more  upon  the 
moral  or  financial  features  as  to  the  desirability  and  safety  of 
that  risk? 

MR.  BROWN  :  I  would  depend  more  upon  the  moral  features. 
With  any  firm  out  there  I  would  consider  that  more  important. 
Of  course,  they  would  have  to  have  a  certain  commercial  and 
financial  standing. 

There  was  an  old  British  firm  in  Constantinople  that  I 
worked  with  that  had  collected  reports  for  a  number  of  years, 
and  through  personal  connection  with  them  I  had  access  to  their 
records  on  firms,  which  gave  a  history  of  a  great  many  of  the 
leading  firms  in  Constantinople. 

THE  CHAIRMAN  :  Is  there  anyone  that  wants  to  ask  Mr. 
Brown  a  question  before  he  sits  down,  because  he  is  right  off 
the  firing  line.  Is  there  anyone  who  wants  to  ask  him  a  ques- 
tion? 

MR.  PARMELEE:  Is  it  possible  to  obtain  the  annual  turn-over 
of  the  merchants? 

THE  CHAIRMAN:  The  number  of  times  they  turn  over  their 
stock  a  year? 

MR.  PARMELEE  :  Yes. 

MR.  BROWN  :  In  the  case  of  some  of  them  in  Constantinople 
that  would  be  pretty  hard.  Most  of  them  live  on  the  turn-o\er. 

MR.  PARMELEE:  I  asked  that  question  for  the  purpose  of 
bringing  before  the  Conference  what  would  be  the  prime  consid- 
erations of  the  credit  basis.  The  first,  is  to  obtain  the  annual 
turn-over  of  the  merchant,  and  whether  he  pays  his  bills  promptly. 
It  does  not  matter  so  much  what  the  capital  of  the  concern  is 
if  the  credit  he  is  asking  is  in  proportion  to  his  annual  turn- 
over and  if  he  meets  his  bills  promptly.  If  that  is  so  the  mer- 
chant is  in  good  standing  the  world  over. 

THE  CHAIRMAN  :  You  feel  that  that  is  a  standard — a  world- 
wide standard? 

MR.  PARMELEE:  A  world-wide  standard. 

I  might  say  further  that  the  Chinese  or  English  banks  in 
China  have  a  habit  of  asking  the  Chinese  merchant  what  'his  turn- 
over has  been  for  the  previous  year  and  grant  him  an  extension 
of  25  per  cent,  for  the  coming  year  if  he  desires  it. 

135 


Third  Session — Monday  Evening 


THE  CHAIRMAN  :  That  is  a  very  good  thought.  Thank  you. 
Is  there  anyone  else  who  wishes  to  ask  Mr.  Brown  a  question 
before  he  sits  down? 

MR.  BARTLETT  (of  the  Commercial  Museum,  Philadelphia)  : 
May  I  ask  one  question,  suggested  by  the  question  just  raised? 
I  think  a  very  important  one  is  the  matter  of  turn-over.  My 
question  is  this:  We  frequently  have  inquiries  from  foreign 
firms,  agents  sometimes,  and  sometimes  dealers  who  wish  to  make 
connections  with  American  manufacturers,  and  the  question  is 
this:  Shall  we  quote  to  that  firm  which  makes  this  inquiry  our 
lowest  price,  or  shall  we  not  ? 

Frequently  we  hear  from  the  foreign  firm  the  criticism: 
"You  have  quoted  your  lowest  price  to  all  the  firms  in  this 
territory,  and  consequently  we  have  no  possibility  of  selling  be- 
cause everybody  in  this  territory  knows  what  the  price  is  that 
you  have  quoted/' 

Too  often  the  tfcne  comes  when  the  American  manufacturer 
quotes  a  price,  his  lowest  export  price,  simply  because  the  inquiry 
comes  to  him  under  a  foreign  postage  stamp. 

But  why  should  he  not  first  find  out  whether  this  firm  is  an 
agent  is  a  dealer,  is  a  wholesale  distributer,  or  is  a  retailer  ? 

The  first  thing  that  we  should  take  into  consideration,  it 
seems  to  me,  is  to  find  out  what  that  merchant  desires  to  do,  and 
then  to  quote  him. 

THE  CHAIRMAN:  Pardon  me,  Mt.  Bartlett,  we  are  not  on 
the  sales  question.  We  are  on  the  credit  question.  Let  us  keep 
on  the  credit  question. 

MR.  BARTLETT  :  I  will  get  back  to  the  credit  question. 

The  kind  of  information  we  want  is,  I  think,  not  only  what 
the  firm  can  do  in  the  way  of  paying  for  the  goods,  but  also 
what  the  firm  can  do  in  the  way  of  selling  the  goods  when  they 
get  them.  It  is  not  only  or  altogether  a  moral  issue;  it  is  not 
altogether  a  financial  issue ;  but  it  is  also  a  selling  proposition.  I 
think  that  it  is  quite  important,  in  the  case  of  selling  goods  to 
a  foreign  firm,  to  find  what  it  can  do  in  the  way  of  handling  the 
products  that  we  have  put  into  their  hands.  We  must  know  not 
only  what  the  absolute  credit  standing  is  of  that  firm,  its  financial 
standing,  but  we  must  know,  also,  what  its  selling  ability  amounts 
to.  I  think  that  is  quite  as  important  as  the  absolute  financial 
risk.  (Applause.) 

THE  CHAIRMAN:  Now,  gentlemen,  we  have  time  for  two 
more,  because  we  have  two  other  topics.  I  believe  we  could 

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Information  Needed  in  Credit  Reports 


spend  the  whole  evening  on  this  topic.  Let  us  hold  to  our  topics. 
We  are  indulgent.  We  are  not  supposed  to  be  autocratic,  and 
I  want  everybody  to  have  a  chance  to  discuss  these  questions.  I 
want  everybody  to  have  an  opportunity  to  have  his  say. 

MR.  BRILL:  I  have  happened  to  be  for  twenty  years  a  com- 
mercial traveler  in  South  America  and  other  foreign  countries, 
and  can  give  my  personal  experience. 

I  have  found,  in  my  time,  that  in  obtaining  or  getting  credit 
the  same  principle  applies  in  foreign  countries  as  in  this  country. 
It  merely  differs  in  the  application  of  the  principle — how  to  get 
at  it. 

As  Mr.  de  Neuflize  said,  it  is  the  way  of  getting  it  a  little 
more  diplomatically.  If  I  want  to  find  out  how  much  business  a 
man  does,  if  I  were  in  his  store,  I  would  say  to  him,  in  an  off- 
hand manner:  "You  do  about  $150,000  worth  of  business,  I  sup- 
pose ?"  Naturally  he  would  say :  "Well,  about  that,  more  or  less, 
or  not  so  much." 

If  I  wanted  to  find  out  about  his  stock,  I  would  say :  "I  see 
you  have  a  nice  stock  of  goods  here,  about  $40,000  or  $50,000?" 
talking  about  something  else  in  the  meantime,  and  I  would  then 
say,  "What  does  it  inventory — $40,000,  about?"  And  he  would 
say,  "About  $25,000,  more  or  less."  You  will  come  very  close 
to  getting  the  information  in  that  way.  And  the  same  way  as 
to  insurance.  The  first  principle  is  to  find  out  that  the  man 
carries  insurance  and  how  much.  Find  out  how  much  business 
he  does  and  how  he  pays  his  bills.  After  finding  out  from  him, 
to  see  whether  he  tells  the  truth,  I  generally  go  to  the  clerk 
afterwards  and  say  to  him :  "You  do  a  nice  business.  You  sold 
about  four  or  five  hundred  dollars'  worth  today?  Is  that  your 
best  day  or  is  it  not?"  "Well,"  he  will  say,  "our  average  is 
about  so  much."  You  can  get  almost  any  kind  of  information 
you  want  just  the  same  as  you  can  in  this  country  if  you  go  at 
it  in  the  right  way.  You  can  find  out  from  him  how  much  busi- 
ness he  does.  You  can  find  out  how  much  insurance  he  carries. 
You  can  find  out  how  much  he  owes.  We  have  just  as  good 
organizations  in  foreign  countries  today  as  we  have  in  our  coun- 
try. 

The  first  consideration  must  be  to  formulate  your  plan. 
Tell  your  men :  "This  is  what  we  want."  State  the  information 
which  you  get  in  this  country  and  instruct  your  men  to  get  the 
same  in  foreign  lands,  and  you  will  get  it  if  they  go  at  it  in 
the  right  way.  Diplomatically.  You  cannot  go  to  these  firms 

137 


Third  Session — Monday  Evening 


as  you  do  to  firms  here,  and  say:  "Show  me  your  statement." 
But  if  you  go  to  them  in  a  nice  polite  way,  they  will  show  it  to 
you,  and  in  Latin  America  the  people  will  do  just  the  same,  if 
you  approach  them  in  a  proper  manner. 

As  far  as  finding  out  the  standing  of  another  firm  is  con- 
cerned, I  used  to  make  a  special  point  of  finding  out  what  the 
nationality  of  the  partners  was.  It  is  a  very  important  point  from 
my  experience.  You  will  find  that  the  credit  men  will  bear  me 
out  that  it  is  an  important  point  even  in  this  country.  If  a 
man  is  an  Assyrian,  he  would  be  judged  differently  from  an 
Englisman,  an  Italian,  a  Frenchman5  a  Latin-American  or  their 
descendants.  We  have  the  same  criterion  in  this  country. 

We  find  in  the  case  of  the  Latin- American — we  find  that 
the  Latin  race  is  especially — I  am  more  familiar  with  the  Latin- 
American  people — that  their  moral  standing — this  is  no  reflection 
on  the  American  people — is  far  superior,  financially  I  mean,  so 
far  as  paying  their  bills  is  concerned,  to  the  average  American 
business  man.  They  generally  pay  their  bills  when  they  agree  to. 
They  try  to  make  the  best  bargain  they  can,  and  they  live  up  to  it. 

While  I  am  talking  about  payment,  I  want  to  take  issue  with 
Mr.  Gonzales ;  he  said  people  paid  and  that  exchange  is  no  factor. 
Exchange  is  a  factor.  You  cannot  expect  a  man  when  the  con- 
dition of  exchange  is  as  it  was  last  year  in  Brazil,  when  exchange 
dropped  from  fifteen  to  ten  or  eleven  pence — you  could  not  ex- 
pect a  man  to  pay  his  bills  the  same  as  in  ordinary  conditions. 
The  man  had  his  money,  but  he  said,  "I  am  willing  to  pay  you 
for  thirty  or  sixty  days'  interest,  but  give  me  a  chance  to  pay: 
exchange  is  bound  to  improve."  But  they  paid. 

I  happened  to  be  in  Para  when  exchange  was  about  eleven 
pence,  and  80  per  cent,  of  the  drafts  presented  were  taken  up 
by  business  men  taking  a  heavy  loss  in  exchange. 

When  I  was  in  Rio  I  took  this  up,  because  we  heard  so 
much  about  conditions  here  and  there,  and  about  the  extreme 
caution  to  be  exercised,  and  so  forth.  I  took  it  up  with  a  man 
and  I  said :  "What  do  you  mean  by  saying  this  ?"  He  said : 
"Well,  that  is  a  general  statement."  I  said :  ''You  must  not  judge 
by  generalities,  but  by  the  actual  facts  of  each  line  separately." 
I  saw  a  friend  of  mine  in  Rio  de  Janeiro,  a  man  who  knows,  and 
I  said  to  him:  "Here  are  so-and-so  and  so-and-so;  how  many 
losses  did  we  have  in  those  branches  of  the  business?"  And  he 
said:  "None,  fortunately."  I  asked  him  how  much  trouble  he 
has  or  had  to  obtain  information,  statements,  and  so  forth,  and 

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Information  Needed  in  Credit  Reports 


he  said :  "None.     We  try  to  have  men  who  know  how  to  handle 
the  business. 

So  that  I  maintain  that  it  is  all  a  question  of  what  you  want, 
and  of  going  about  it  in  the  proper  way  to  get  that  information. 

I  am  not  speaking  from  the  standpoint  of  a  novice,  but  from 
the  point  of  view  of  the  American  business  man.  If  you 
formulate  your  plans  and  say  you  want  the  same  kind  of  informa- 
tion as  in  this  country,  that  you  want  to  know  how  much  busi- 
ness the  man  does,  how  much  he  is  worth,  how  much  insurance 
he  carries,  how  he  pays  his  bills,  how  much  stock  he  has  got  on 
hand,  and  how  much  he  owes,  I  do  not  believe  that  any  business 
man,  be  it  in  the  Levant,  be  it  in  France  or  in  Germany,  in  England 
or  in  Brazil  or  in  Argentina  or  in  Chile  or  anywhere  else,  I  do 
not  believe  that  any  business  man  will  refuse  to  give  it  to  you  if 
you  approach  him  in  the  right  spirit. 

That  is  all  I  have  to  say. 

THE  CHAIRMAN  :  We  can  have  a  little  more  clinical  work, 
gentlemen.  Here  is  another  representative  right  from  the  firing- 
line.  Are  there  any  questions  that  any  of  you  desire  to  ask  him  ? 

MR.  PHILLIPS  :  I  would  like  to  ask  this  gentleman  to  tell  me : 
We  can  get  that  information  if  we  know  how  to  do  it.  To  get 
it  in  that  way  it  seems  to  me  we  would  have  to  go  to  the  man. 
We  cannot  go  and  ask  the  man.  What  is  the  intermediate  source 
through  which  to  secure  the  information? 

THE  CHAIRMAN  :  Do  not  get  on  the  second  topic. 

MR.  BRILL:  I  will  answer  the  gentleman,  if  you  will  permit 
me. 

THE  CHAIRMAN:  Yes;  but  do  not  confuse  the  issue. 

MR.  BRILL:  Most  of  those  European  houses  rely  on  the 
information  they  obtain  from  their  salesmen,  their  representa- 
tives. Those  who  have  no  representatives  have  to  rely  on  the 
ordinary  channels  that  we  have — the  mercantile  agencies  or  or- 
ganizations. 

THE  CHAIRMAN:  Let  me  ask  you  a  question.  As  an  ex- 
perienced investigator  you  are  going  to  look  up  the  credit  stand- 
ing of  a  Latin-American. 

MR.  BRILL  :  Yes. 

THE  CHAIRMAN:  What  information  will  you  aim  to  get? 

MR.  BRILL:  I  just  mentioned,  first  the  amount  of  business 
he  does  yearly. 

THE  CHAIRMAN:  The  amount  of  business  he  does?  All 
right.  What  next?  j 

139 


Third  Session — Monday  Evening 


MR.  BRILL:  Second,  how  much  capital  he  has;  how  much 
he  owes;  how  much  stock  he  carries;  how  much  outstanding; 
how  much  insurance,  how  much  his  expenses  are  per  year. 

THE  CHAIRMAN  :  How  about  the  moral  features  ? 

MR.  BRILL:  The  moral  feature  is  naturally  taken  into  con- 
sideration. I  mentioned  that  at  the  beginning.  It  is  the  same 
everywhere — it  makes  no  difference  where  it  is. 

The  first  principle  of  credit  is  confidence,  honesty.  I  have 
had  men  worth  a  hundred  and  fifty  thousand  dollars  who  owed 
twenty-five  thousand  dollars  and  I  have  turned  them  down. 
On  the  other  hand,  I  have  had  a  man  worth  twenty  thousand 
dollars  who  owed  seven  thousand  dollars,  and  I  have  given  him 
a  nice  line  of  credit. 

THE  CHAIRMAN:  What  constitute  the  moral  features  of  a 
Latin- American  risk?  We  understand  confidence,  and  so  forth. 
What  constitute  the  features  of  a  Latin- American  risk? 

MR.  BRILL:  The  moral  feature  of  a  Latin-American  in  busi- 
ness is  that  he  pays  his  bills  when  he  agrees  to. 

I  want  to  mention  one  thing.  One  gentleman  said  that  it  is 
hard  to  get  a  man  to  sign  a  statement;  that  if  obtained,  it  is 
worthless.  He  is  wrong;  positively  wrong. 

I  believe  that  the  laws  in  foreign  countries,  especially  Latin 
America,  protect  the  foreigner  much  more  than  our  laws  protect 
us  in  our  own  country. 

I  will  go  further,  if  you  will  permit  me.  I  can  say  this: 
During  all  my  travel,  for  twenty-six  years,  I  did  not  accept  an 
order  except  with  the  signature  of  the  purchaser.  A  signed  order 
is  a  contract ;  the  merchant  cannot  refuse  the  merchandise 
except  for  very  good  reasons,  according  to  the  laws  of  most 
countries,  because  it  is  a  binding  contract.  Wlien  I  get  a 
statement  from  a  man,  to  make  it  official,  or  rather  to  make  it 
binding,  I  sometimes  have  it  certified  by  a  notary  public,  and 
sworn  to ;  if  false  I  can  proceed  quickly  to  punish  him.  I  believe 
it  has  been  stated  here  tonight  that  it  would  take  years  of  litiga- 
tion to  do  it.  That  certainly  is  not  the  fact.  Anyone  who  is  ac- 
quainted with  the  laws  will  bear  me  out  that  a  merchant  in  Latin 
America  who  accepts  a  draft  and  does  not  pay  it  on  presentation, 
that  is  sufficient  ground  for  closing  up  his  business  without  much 
loss  of  time. 

I  had  a  case  in  one  foreign  country.  The  National  Asso- 
ciation of  Manufacturers  handled  it  for  me  through  their  inter- 
mediate agents,  and  I  made  a  bet,  I  think  it  was  with  Mr.  Wolfe, 

140 


Information  Needed  in  Credit  Reports 


that  the  man  who  lost  the  suit  would  also  pay  the  lawyer's  fees. 
I  wi< !i  that  we  had  the  same  law  in  this  country,  many  suits  would 
be  settled  out  of  court.  In  many  foreign  countries  commercial 
cases  are  not  tried  by  a  judge,  but  also  by  business  men,  business 
men  alone  acting  as  advisors  to  the  judge;  and  decided  upon  ac- 
cording to  conditions,  and  on  business  principles. 

I  do  not  know  what  else  you  want  to  know  about  the  moral 
feature. 

THE  CHAIRMAN  :  I  think  you  have  answered  that  question. 

MR.  BRILL:  All  right. 

THE  CHAIRMAN  :  If  you  were  investigating  a  Syrian  mer- 
chant, what  information  would  you  seek — just  right  quickly? 

MR.  BRILL  :  Go  ahead. 

THE  CHAIRMAN:  You  said  you  would  distinguish  between 
the  two  merchants  ? 

MR.  BRILL:  Yes. 

THE  CHAIRMAN:  What  would  you  seek  in  the  case  of  a 
Syrian  merchant? 

MR.  BRILL  :  In  the  case  of  the  Syrian  I  would  be  governed  by 
exactly  how  much  money  he  has  got.  I  would  probably  see  that 
he  has  got  75  to  25 ;  75  per  cent,  assets  to  25  per  cent,  liabilities ; 
whereas  I  will  give  my  Latin  American  50-50.  Does  that  answer 
it? 

THE  CHAIRMAN  :  I  want  you  to  pardon  me  for  conducting 
this  quiz;  but  I  have  often  said  that  I  ought  to  have  been  a 
school  teacher  rather  than  a  credit  man.  I  have  brought  those 
things  out  for  your  information,  because  I  think  they  bear  very 
directly  upon  the  question. 

MR.  BRILL:  I  am  glad  to  answer  any  questions  you  want  to 
ask  me. 

THE  CHAIRMAN  :  You  have  differentiated,  and  have  said  that 
in  the  Latin-American  countries  you  would  give  50-50,  but  with 
the  Syrian  he  must  have  3  to  i ;  it  must  be  75  to  25,  in  the  com- 
mon parlance.  I  think  that  answers  all  that  I  had  in  mind.  Is 
there  anyone  else  who  desires  to  ask  any  questions  of  Mr.  Brill? 
If  not,  we  thank  you  very  much. 

MR.  BENNEY:  I  want  to  emphasize  what  Mr.  Brill  has  said 
about  getting  information  and  how  to  get  it.  The  experience  of 
our  Credits  Bureau  investigators  bears  out  Mr.  Brill's  statements. 
I  endorse  everything  he  said  on  that  subject. 

THE  CHAIRMAN  :  Gentlemen,  we  have  occupied  a  great  deal  of 
time  on  this  question.  We  have  the  two  other  subjects  to  con- 

141 


Third  Session — Monday  Evening 


sider.     Shall  we  hear  from  someone  else  or  shall  we  sum  up 
this? 

A  young  lady  in  attendance  who  is  an  export  manager  for 
one  house  has  sent  up  a  question  that  she  would  like  me  to  pro- 
pound to  Mr.  Brown.  "Mr.  Brown  stated  that  he  could  obtain 
information  from  American  consuls.  Is  this  true,  and  if  so, 
how?"  (Laughter.) 

Just  a  moment.  I  do  not  think  it  was  right  for  me  to  read 
that  question,  do  you?  I  think  that  young  lady  has  a  part  here 
just  as  much  as  you  or  I,  and  I  hope  she  will  come  in  and  take 
her  place  here,  and  that  she  will  be  willing  to  repeat  that 
question.  (Applause.) 

Miss  LIGGETT  (of  French  &  Ward,  New  York) :  I  notice 
that  Mr.  Brown  stated  he  would  go  to  a  consul  and  obtain  infor- 
mation in  regard  to  firms  in  Constantinople  and  other  places.  I 
have  always  understood  it  was  impossible  for  American  consuls 
to  give  informaiton  in  regard  to  firms,  to  give  their  names.  Is 
this  true?  I  do  not  know.  I  just  wanted  to  be  put  right  in  regard 
to  the  matter. 

THE  CHAIRMAN  :  Mr.  Brown,  it  is  up  to  you. 

MR.  BROWN  :  In  the  outset  I  said  I  was  a  beginner  in  this 
work.  I  did  not  expect  that  I  would  be  asked  questions.  How- 
ever, I  said  in  regard  to  this  that  I  would  get  a  personal  opinion 
from  the  consul.  I  know  very  well  that  the  consul  cannot  make 
any  recommendations  at  all,  but  as  a  personal  friend  I  may  get 
information  from  a  personal  friend,  to  be  used  confidentially  in 
that  way. 

THE  CHAIRMAN  :  Now,  Miss  Liggett,  that  that  question  has 
been  answered,  it  looks  like  an  inside  affair  for  Mr.  Brown.  I 
was  going  to  say  this,  that  if  the  American  consul  could  see  you 
as  we  see  you  tonight  he  would  answer  any  inquiry  that  you 
might  make  of  him.  (Laughter  and  applause.) 

Now,  gentlemen,  it  is  three  minutes  to  ten  o'clock.  I  know 
some  of  you  have  got  to  go  out  on  the  Erie.  I  do  not  think  we 
could  spend  perhaps  more  than  an  hour  longer.  We  have  two 
other  subjects.  This  has  been  to  me  intensely  interesting.  The 
question  is,  shall  we  talk  for  a  few  minutes  longer  along  this 
line,  or  shall  we  size  up  what  we  have  done  here  tonight?  This 
is  certainly  a  kindergarten,  and  it  seems  to  me  we  will  have  to  do 
a  little  stirring  up  to  see  where  we  stand.  Does  anyone  want 
to  say  a  word  or  two  before  we  finish  with  this  subject? 

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Information  Needed  in  Credit  Reports 


MR.  MAY  :  I  have  just  returned  from  a  trip  through  Central 
and  South  America  and  only  want  to  say  a  few  words.  I  find 
that  most  desirable  firms  there — and  only  desirable  firms  are  the 
ones  we  want  to  do  business  with — have  been  in  business  for  a 
long  time  and  have  a  history.  These  firms  are  only  too  glad  to 
give  you  any  reasonable  information  regarding  their  standing, 
and,  furthermore,  will  refer  you  to  either  European  or  American 
houses  with  whom  they  have  been  doing  business.  It  is  very  easy 
to  get  this  information  from  the  houses  here  or  in  Europe,  and 
we  can  readily  find  whether  the  Latin-American  houses  have 
been  paying  their  bills  promptly,  whether  they  are  chicaners  in 
their  methods  of  doing  business,  whether  they  take  advantage 
of  deliveries,  which  are  a  few  days  late,  to  claim  a  reduction 
of  prices — in  short,  whether  they  are  above  board  or  not. 

What  I  mean  to  convey  is :  In  doing  business  with  foreign 
countries  we  should  not  apply  the  standard  of  our  home  methods 
to  procure  information  regarding  the  standing  of  people  we 
want  to  do  business  with.  Houses  in  Latin-American  countries 
doing  business  here  or  in  Europe  with  good  houses  and  having 
done  so  for  a  number  of  years  and  having  always  paid  their  bills 
promptly,  are  in  my  opinion  good  enough,  and  I  can  judge  their 
business  responsibility  from  the  information  gathered  in  this 
way. 

I  would  like  to  call  your  attention  to  another  fact:  The 
science  of  failure  has  not  been  developed  in  Central  and  South 
American  countries  to  that  high  and  fine  degree  that  it  has  been 
developed  here.  A  man  who  fails  once,  or  is  not  very  prompt  in 
his  payments  will  have  placed  against  his  name  a  black  mark  that 
shuts  off  his  credit  not  only  from  here  but  also  from  Europe. 
Therefore,  as  a  rule,  merchants  meet  their  bills  very  much  more 
promptly  than  the  average  merchant  in  this  country.  That  has 
been  my  experience,  and  I  can  speak  with  confidence. 

THE  CHAIRMAN  :  Thank  you  very  much. 

MR.  BERGMAN  (of  Pass  &  Seymour,  Inc.,  Solvay,  N.  Y.)  : 
Before  we  pass  along  to  the  next  subject,  Mr.  Chairman,  I  would 
like  to  say  a  word  along  the  literal  sense  of  this  one :  "Character 
of  credit  information  needed  in  credit  reports."  A  number  of 
concerns  doing  an  export  business  probably  have  their  own  little 
schemes  for  obtaining  personal  and  direct  information  on  a  con- 
cern or  people  with  whom  they  wish  to  do  business,  but  most  of 
us,  particularly  the  beginners,  have  to  depend  upon  the  customary 
public  sources  for  information.  I  find,  and  I  think  it  has  been 

143 


Third  Session — Monday  Evening 


the  experience  of  a  number  of  other  concerns  that  most  of  these 
reports  dwell  too  largely  upon  the  moral  question;  about  the 
importance  of  the  firm's  local  standing  or  of  the  personnel  of  its 
officers;  but  we  do  not  give  anything  tangible  on  which  to 
establish  a  proper  line  of  credit  or  fix  a  limit.  I  am  confident 
that  these  institutions  who  sell  credit  information,  can  greatly 
improve  the  quality  of  their  reports  if  they  would  follow  more 
closely  the  American  idea  of  reducing  the  reports  to  figures 
such  as  assets,  liabilities,  net  financial  worth,  volume  of  busi- 
ness, etc. 

THE  CHAIRMAN  :  Thank  you. 

Now,  gentlemen,  we  must  discontinue  this  part  with  just  a 
little  summing  up.  Let  me  see  if  I  can  consolidate  this  very 
briefly,  for  us  to  carry  away,  as  a  result  of  this  part  of  the 
evening,  as  concerns  the  desirable  and  necessary  information: 
That  the  credit  man  of  this  country  must  know  something  as 
concerns  the  conditions,  social,  local,  financial,  of  the  districts 
in  which  he  sells,  because  there  are  different  standards  in  our 
own  country,  as  the  credit  man  knows;  so  in  foreign  credits,  he 
must  acquaint  himself  with  the  standards  of  the  country  in  which 
he  sells  his  goods.  Is  that  right? 

SEVERAL  DELEGATES  :  Yes. 

THE  CHAIRMAN:  Is  there  any  objection  to  that  statement? 

SEVERAL  DELEGATES  :  No. 

THE  CHAIRMAN:  Is  that  right? 

SEVERAL  DELEGATES  :  Yes. 

THE  CHAIRMAN  :  The  second  point  is  that  there  is  a  variance 
as  regards  the  getting  of  information,  but  there  seems  to  be  a 
consensus  of  opinion  that  the  make-up  or  construction  of  in- 
formation on  foreign  credits  will  comprise  three  features: 
^     First,  what  we  call  the  moral  feature. 

Second,  the  financial  feature. 

Third,  the  paying  feature.  Am  I  right?  Is  there  any  ex- 
ception to  that?  Is  that  the  result  of  our  conference  so  far? 

MR.  WYMAN  (of  The  Carter's  Ink  Company)  :  I  think  one 
of  the  speakers  brought  out  a  point  which  has  not  been  developed, 
and  that  is  the  insurance  feature;  that  is,  the  importance  of  a 
merchant  insuring  his  merchandise.  I  think  that  should  be 
added  to  the  moral  feature. 

THE  CHAIRMAN:  That  is  just  what  we  want.  You  add  to 
it,  gentlemen.  I  am  only  stating  these  things  tentatively  that 
we  have  developed  so  far.  We  have  the  moral  feature,  which 

144 


Means  for  Securing  Credit  Information 


comprises  the  history  or  the  record  of  the  merchant,  the  time 
he  has  been  in  business.  We  have  the  financial  feature,  which 
is  his  capital,  the  amount  he  is  owing,  his  turn-over  in  stock. 
We  have  his  method  of  paying,  and  we  have  the  insurance  feature. 
What  else  shall  we  add  to  that?  If  there  is  no  exception,  that 
is  what  we  want,  gentlemen,  in  foreign  credits. 

MR.  BRILL:  Won't  you  add  the  character  of  the  man,  the 
nationality  of  the  man? 

THE  CHAIRMAN:  That  is  the  moral  feature.  We  call  that 
the  record,  the  time  that  he  has  been  in  business,  how  he  is 
considered  by  his  neighbors,  and  references  and  so  forth;  that 
is  the  moral  quality.  That  is  what  we  want.  The  belief  is  that 
in  some  countries  that  is  difficult  to  get.  Some  others  say  we  can 
get  it  if  we  go  after  it.  Therefore,  education  is  in  place,  and 
there  should  be  no  hesitation  upon  the  part  of  the  commercial 
credit  granter  to  foreign  countries  to  ask  that  which  he  feels  it 
is  necessary  to  get;  and  when  he  asks  it,  he  helps  the  educa- 
tional propaganda.  That  is  right,  is  it  not? 

Has  that  sized  up  our  first  part  in  this  Conference?  Are  we 
going  to  carry  that  away  with  us  and  have  spines  in  this  work  ? 

One  of  the  greatest  disadvantages  in  domestic  credits  is  what 
we  call  the  spineless  credit  man,  the  man  who  hesitates  to  go 
after  what  he  feels  he  needs,  and  to  ask  that  which  is  due  him. 
So,  in  foreign  credits,  we  want  to  develop  men  with  spines,  who 
will  help  along  this  propaganda  to  put  this  great  nation  of  ours 
where  she  ought  to  be  among  the  trading  nations  of  the  world. 

Now,  gentlemen,  we  are  coming  to  the  second  part  of  this 
program,  and  we  will  devote  just  thirty  minutes  to  the  consid- 
eration of  each  part. 

The  next  question  is  the  Means  of  Assembling  the  Informa- 
tion. We  have  here  representatives  of  various  channels  for  as- 
sembling this  information,  and  we  want  them  to  tell  us  just  how 
it  is  done,  and  just  what  they  are  doing.  Let  us  get  at  it  very 
quickly.  Who  will  be  the  first  speaker  ? 

BARON  DE  NEUFLIZE:  As  to  the  way  of  securing  foreign 
credit  reports,  I  think  a  foreigner  is  entitled  to  give  an  idea,  es- 
pecially when  nobody  is  ready  to  go  before  the  Conference  at 
this,  apparently. 

I  would  say  the  best  way  of  securing  information  in  regard 
to  foreign  credit  is  to  go  and  look  for  it  yourself.  Everybody 
should  go  and  look  for  himself,  about  the  people  he  wants  to 
know  about;  because  when  he  asks,  he  can  ask  in  two  ways: 

145 


Third  Session — Monday  Evening 


either  of  the  people  who  deal  with  the  man,  or  of  the  informa- 
tion agencies.  Information  agencies  give  information  which  is 
very  valuable,  but  which  is  impersonal.  For  example,  they  say  a 
firm  is  good  for  $50,000.  If  they  issue  a  statement  to  a  hundred 
people,  and  a  hundred  people  give  $50,000  credit,  the  man  is 
perhaps  no  good  for  $5,000,000.  (Laughter.) 

When  you  come  to  ask  somebody  who  deals  with  the  man, 
you  must  not  forget  that  the  man  who  has  collected  the  informa- 
tion through  his  cleverness  and  his  work  has  something  of  value, 
which  has  required  the  expenditure  of  time  and  energy  and  judg- 
ment on  his  part,  and  that  he  will  not  always  be  willing  to  part 
with  it,  unless  he  has  some  consideration  for  it.  He  will  part 
with  it  to  a  customer,  but  if  it  is  a  man  in  the  same  line  of 
trade  with  himself,  it  is  different.  If  it  is  a  good  customer 
that  he  does  not  want  to  lose,  if  he  says,  "the  man  is  very  good, 
and  I  have  been  doing  very  good  business  with  him,"  he  will 
think  to  himself:  "I  do  not  want  to  say  too  much;  he  is  a 
very  good  customer,  and  I  am  afraid  I  would  lose  him."  On  the 
other  hand,  it  might  be  very  difficult  for  me,  who  know  a  man, 
to  risk  putting  him  in  further  trouble,  unless  I  know  he  is 
really  bad  and  can  say  so;  but  if  he  is  half  and  half,  it  is  very 
difficult  to  give  information  about  a  firm  I  know  in  a  personal 
way,  giving  it  out  knowing  that  a  man  will  take  the  information 
and  report  that  my  friend  is  no  good,  perhaps. 

So  that  the  best  method  of  getting  information  is  to  look 
after  it  yourself.  I  have  done  it  myself.  I  have  been  all  over 
South  America  and  all  over  North  America,  and  Canada,  and  in 
twenty-three  countries  in  America.  I  have  spent  five  years  in 
this,  and  I  know  very  little,  but  I  know  a  little  about  each  coun- 
try; and  I  have  the  feeling,  perhaps  because  I  am  conceited,  that 
I  know  enough  now  to  be  able  to  understand  what  other  people 
will  tell  me,  because  I  have  acquired  a  standard,  of  which  some- 
thing was  said  a  little  while  ago.  So  my  best  advice  is  to  go  and 
look  for  yourself.  If  you  will  do  that,  you  will  be  surprised  how 
much  more  confidence  you  will  have  personally  in  the  people  with 
whom  you  are  dealing,  when  you  have  seen  where  they  are  and 
what  they  look  like  and  what  they  are  doing.  (Applause.) 

MR.  KRUSEN  (of  the  Josephine  Le  Fevre  Company,  Phila- 
delphia) :  Permit  me  to  tell  you  how  I  assemble  my  information. 
I  got  into  the  export  business  by  accident.  It  was  such  a  good 
accident  that  I  realized  it  was  going  to  be  profitable.  So,  when  I 
took  the  Prinz  August  With  elm  and  went  to  South  America  I  put 
$800  in  my  pocket,  and  it  has  made  me  many  thousands. 

146 


Means  for  Securing  Credit  Information 


In  every  city  I  went  into  I  first  presented  myself  to  the 
consul  and  said :  "Consul,  I  am  here  for  a  certain  purpose.  Will 
you  help  me?"  And  he  would  say:  "Sure.  I  am  glad  to  see 
you."  Because  the  average  American  consul  has  the  experience 
that  about  the  only  man  he  ever  sees  from  the  United  States  is 
the  man  who  is  broke  and  wants  a  stake  to  get  him  home,  and  he 
was  glad  to  see  a  man  who  had  money  in  his  pocket. 

I  said:  "Now,  I  do  not  know  anything  about  the  Spanish 
language,  but  I  have  a  secretary  with  me  who  does."  He  said, 
"All  right,  go  and  see  So-and-so  and  So-and-so  and  So-and-so." 
And  I  went  and  saw  them.  You  cannot  do  business  in  Latin 
America  the  same  as  you  do  in  New  York  and  Chicago.  You 
cannot  go  in  and  chuck  down  your  bag  and  say,  "I  am  here.  I 
will  show  you  my  samples,  and  I  have  got  to  get  out  on  the 
next  train."  You  have  to  do  business  in  anywhere  from  three 
or  four  to  six  or  seven  days.  It  has  got  to  be  more  or  less  of  a 
social  affair. 

I  found,  after  fourteen  weeks,  that  I  had  laid  the  foundation 
of  a  profitable  export  business  purely  on  sentiment,  because  there 
are  so  many  men  there  that  are  so  glad  to  see  you  and  do 
business  with  gentlemen  who  approach  them  in  a  gentlemanly 
manner,  that  you  can  get  all  the  business  you  want.  That  is, 
within  reason.  The  result  is  that  I  have  what  I  consider  an 
elegant  foundation  for  the  rest  of  my  days,  and  the  days  of  my 
sons  and  their  sons. 

I  wish  to  say  this  about  Latin  America;  that  there  are  so 
many  good  firms  to  do  business  with  that  you  do  not  have  to 
hunt  for  the  others. 

The  principal  question  is  the  ability  of  a  man  to  meet  his 
obligations  when  they  are  due.  When  the  obligation  is  due, 
he  will  pay  it.  If  he  will  not  pay  it,  there  is  some  mighty  good 
reason. 

As  an  illustration,  I  sent  $900  worth  of  soap  into  Bogota 
about  eight  years  ago,  accompanied  by  draft  at  four  months' 
sight.  I  received  a  letter  in  which  they  said :  "We  are  very  sorry, 
but  we  are  unable  to  pay  this  draft  the  day  it  is  due.  What  shall 
we  do  with  the  soap  ?"  Well,  they  had  the  soap.  I  did  not  want 
it.  I  said,  "Keep  the  soap,  sell  it,  because  you  gentlemen  have  had 
such  an  enviable  reputation  for  a  good  many  years  that  I  know 
if  you  cannot  pay  it  there  is  some  very  good  reason.  Cable 
to  me  and  I  shall  be  glad  to  duplicate  the  order." 

I  received  a  letter,  which  is  framed  in  my  office.  They  ap- 
preciated what  I  had  done  for  them,  and  I  had  that  money  on 

147 


Third  Session — Monday  Evening 


my  desk  ninety  days  before  I  would  have  had  it  had  they  honored 
the  draft.  That  shows  moral  responsibility,  and  Latin  America 
is  full  of  it. 

I  want  to  tell  you  right  now  that  if  you  would  put  money 
in  your  pocket  and  go  down  there  and  make  the  acquaintance 
of  these  gentlemen  and  find  how  they  live,  find  the  reputation 
that  they  have  in  their  own  local  community,  and  make  a  dis- 
tributing point  of  one  man  in  one  town,  the  same  as  I  have  done, 
you  would  find  your  business  would  keep  on  growing  and  growing 
and  growing.  You  do  not  have  to  hunt  for  bad  risks.  You  run 
no  chance  in  extending  credit,  but  you  need  to  go  there 
just  the  same  as  you  go  to  sell  your  goods  in  Philadelphia 
or  in  New  York  or  St.  Louis  or  any  other  point;  and  the  boss 
ought  to  go.  If  he  cannot  go,  he  ought  to  send  the  man  next  to 
him.  But  let  him  go  there  and  do  not  let  him  be  in  a  hurry, 
because  you  cannot  hurry  these  people.  They  are  not  going  to 
be  hurried  simply  because  you  are  in  a  hurry.  They  take  their 
time  to  do  their  business.  They  have  their  own  ways  of 
doing  business,  and  I  think  it  is  more  or  less  of  an  insult  to 
try  to  tell  people  that  they  should  do  business  in  a  certain  way, 
when  they  have  been  doing  business  successfully  for  years,  and 
the  man  to  whom  you  are  talking  may  be  worth  a  hundred  thou- 
sand dollars  or  two  hundred  thousand  dollars,  which  is  not  any- 
thing unusual.  I  would  just  as  lief  trust  those  fellows  there 
as  some  of  the  big  department  stores  in  New  York  City. 

THE  CHAIRMAN  :  You  are  not  holding  to  your  promise.  You 
said  you  would  tell  us  how  you  got  the  information.  You  are 
saying  how  you  sold  them.  Tell  us  how  you  got  the  information. 

MR.  KRUSEN  :  The  first  thing  I  did  was  to  go  to  our  consul. 
I  said,  "I  want  to  sell  Brown.  What  do  you  know  about  him?" 
He  said,  "Brown  has  been  doing  business  here  for  twenty-five  or 
thirty  years,  and  he  has  always  honored  his  paper.  He  has  always 
accepted  his  drafts  and  paid  them  when  they  were  due."  What 
more  do  you  want?  You  cannot  beat  that. 

It  is  not  a  question  of  capital.  If  a  man  has  enough  capital, 
money  in  the  bank  to  finance  his  business,  he  can  certainly  pay 
his  bills. 

THE  CHAIRMAN:  That  is  the  way  that  you  assemble  the 
information  ? 

MR.  KRUSEN  :  Yes. 

THE  CHAIRMAN  :  Now  we  have  the  two  gentlemen  who  have 

148 


Means  for  Securing  Credit  Information 


spoken  upon  the  point  and  presented  to  us  one  way  of  assembling 
the  information ;  that  is,  getting  it  yourself. 

MR.  KRUSEN:  I  went  after  it. 

THE  CHAIRMAN:  Yes. 

MR.  KRUSEN:  And  when  I  came  home  I  was  thoroughly 
equipped  to  do  business  with  these  men,  because  I  had  been  down 
there  with  them,  and  had  a  cocktail  with  them — 

THE  CHAIRMAN:  I  hope  it  was  not  more  than  one. 
(Laughter.) 

MR.  KRUSEN  :  And  had  gone  to  see  the  bullfights  with  them 
and  the  cockfights. 

THE  CHAIRMAN  :  Thank  you  very  much. 

Now,  gentlemen,  we  must  move  rapidly.  We  have  had  the  two 
gentlemen  who  spoke  to  the  point  of  getting  the  information  for 
yourselves. 

Now  we  have  the  agencies  who  assemble  the  information. 
Let  us  hear  from  them.  What  agencies  assemble  the  information 
for  us?  We  have  representatives  here  of  the  two  leading  mer- 
cantile agencies,  and  I  hope  each  one  will,  in  a  few  words,  tell  us 
what  they  are  doing  in  that  field.  Mr.  Green,  of  R.  G.  Dun 
&  Company.  Is  he  in  the  room? 

MR.  GREEN  :  Mr.  Chairman  and  Gentlemen,  I  have  listened 
with  a  good  deal  of  interest  to  your  statement  of  what  you  want, 
and  also  to  a  statement  that  Mr.  Benney  made,  which  I  want  to 
emphasize,  if  I  am  allowed  to  do  so,  and  that  is,  that  we  have 
been  hearing  a  great  deal  through  magazine  writers  and  men  of 
prominence  in  other  lines  who  have  spoken  of  the  difficulty  of 
getting  information  about  foreign  firms,  and  some  have  gone  so 
far  as  to  say  there  was  no  means  of  getting  any  information  of 
that  kind. 

I  want  to  tell  you,  very  briefly,  something  of  what  is  going 
on  along  that  line,  in  addition  to  the  work  of  this  organization 
and  others.  I  am  speaking  and  shall  speak  only  of  the  mercan- 
tile agency  of  R.  G.  Dun  &  Company. 

Some  of  you,  perhaps  most  of  you,  know  that  R.  G.  Dun  & 
Company  was  the  first  organization  to  attempt  the  systematic 
gathering  of  information  in  relation  to  the  credit  standing  of 
business  firms;  the  first  in  the  world.  The  head  office  was  es- 
tablished here  in  this  city  in  1841,  75  years  ago,  and  today 
that  agency  is  the  only  organization  that  maintains  any  con- 
siderable number  of  offices  in  foreign  countries  under  its  own 
name  and  management. 

149 


Third  Session — Monday  Evening 


Those  offices  today  number  96,  and  they  are  fairly  well 
scattered.  With  your  permission  I  will  give  you  an  idea  of 
the  magnitude  of  the  work  that  is  going  on  and  the  facilities 
that  are  at  your  disposal,  and  will  mention  some  of  the  dates 
when  these  offices  were  opened. 

The  first  branch  established  in  a  foreign  country  was  that  in 
London  in  1857.  That  was  followed  by  a  branch  in  France  in 
1872;  Germany  in  1876;  Australia  in  1887;  Mexico  in  1897; 
Cuba  in  1899;  South  Africa  in  1901;  Argentina  in  1902;  Spain 
in  1903 ;  Austria  in  1904;  Brazil  in  1913 ;  and  since  that  there  has 
been  a  branch  established  in  Porto  Rico. 

All  of  these  branches  are  what  we  call  district  branches; 
that  is,  they  have  reporting  stations  attached  to  them,  which  are 
constantly  sending  in  information  and  making  investigations  as 
they  are  called  upon. 

To  give  you  a  further  idea  of  this  matter,  I  would  say  that 
in  the  United  Kingdom  we  have  4  branches;  in  France,  2;  in 
Belgium,  3 — of  course,  Belgium  does  not  amount  to  much  just 
now ;  in  Holland,  3 ;  in  Germany}  23 ;  in  Argentina,  2 ;  in  Cuba,  i ; 
in  Austria,  5 ;  in  Hungary,  i ;  in  Switzerland,  i ;  in  Spain,  7 ;  in 
Portugal,  2 ;  in  Italy,  3 ;  in  Brazil,  i ;  in  Australia,  5 ;  in  New 
Zealand,  4 ;  in  Mexico,  7 ;  in  South  Africa,  4 ;  in  Porto  Rico,  i ; 
and  17  in  Canada,  making  96  in  all. 

Now,  gentlemen,  in  the  face  of  the  great  war  in  Europe 
and  the  conditions  that  have  existed  in  Mexico,  these  branches 
have  all  been  maintained  at  a  great  expense,  and  with  the  full 
realization  that  further  very  large  expenditures  must  be  met  in 
the  correcting  of  our  lists  and  the  revising  of  our  reports  when 
the  war  is  over. 

All  of  this  is  with  the  object  that  the  mercantile  agency  shall 
be  in  a  position  to  aid  the  American  business  men  in  the  develop- 
ment of  their  foreign  trade  without  unnecessary  risk,  and  enable 
them  to  meet  the  requirements  of  the  trade  with  reasonable 
safety. 

As  you  all  know,  very  great  changes  are  going  on  and  all 
credit  information  obtainable  is  necessary  for  the  safe  conduct  of 
your  business. 

In  the  course  of  years  we  have  organized  a  competent  staff 
of  reporters  and  correspondents,  numbering  many  thousands,  lo- 
cated in  the  countries  where  branches  have  not  yet  been  estab- 
lished. 

150 


Means  for  Securing  Credit  Information 


These  men  have  been  selected  with  the  utmost  care  and  are 
thoroughly  posted  on  the  conditions  of  the  countries  in  which 
they  are  located,  and  many  of  them  have  acted  in  this  capacity 
for  a  great  many  years,  and  they  are  constantly  in  touch  with  the 
various  branches  and  with  the  home  office  here  in  New  York. 
So  that  you  will  see,  gentlemen,  that  exactly  the  same  system  of 
gathering  information  in  the  foreign  countries  is  in  use  that  is 
employed  in  certain  sections  of  the  United  States. 

There  are  sections  here  where  we  have  to  depend  upon  our 
reporters  and  it  is  exactly  the  same  in  the  foreign  countries. 

It  has  been  mentioned  by  some  of  you  gentlemen  who  have 
spoken  of  the  requirements,  and  what  you  feel  you  need  in  the 
way  of  foreign  information,  the  question  of  obtaining  statements. 

It  has  not  been  an  easy  matter  to  obtain  financial  statements 
in  foreign  countries  as  we  get  them  here,  and  it  has  taken  a 
great  many  years  of  educational  work  to  get  the  merchants  to 
realize  that  in  making  their  financial  statements  and  signing  them, 
as  the  American  business  man  does,  they  are  doing  more  for 
themselves  than  they  are  doing  for  anybody  else  on  the  face  of 
the  earth.  They  are  gradually  recognizing  that  fact,  and  we 
find  that  constantly  there  is  that  disposition  to  sign  up  their 
statements  just  as  the  American  merchant  does. 

Now,  gentlemen,  I  do  not  want  to  trespass  beyond  the  five 
minutes'  rule. 

THE  CHAIRMAN  :  We  can  give  you  a  minute  longer,  be- 
cause our  time  is  brief,  you  know. 

MR.  GREEN:  I  know.  That  is  why  I  wanted  to  stop  now. 
I  was  going  to  ask  you  if  there  are  any  questions  that  anyone 
desires  to  ask  me. 

THE  CHAIRMAN  :  Go  ahead  and  finish,  Mr.  Green.  You 
have  one  minute  longer,  and  then  we  will  proceed  to  the  others. 

MR.  GREEN:  I  should  prefer,  if  agreeable  to  you,  sir,  if 
anyone  desires  to  ask  me  any  questions  to  devote  that  minute  to 
answering  such  questions. 

THE  CHAIRMAN:  Has  anyone  a  question  to  ask  Mr.  Green 
about  that  service,  the  foreign  service  of  R.  G.  Dun  &  Company  ? 
This  has  been  very  interesting.  If  there  are  no  questions  to  be 
asked  of  Mr.  Green,  we  will  proceed  to  something  else. 

MR.  GREEN:  I  am  very  sorry  to  have  taken  up  the  time — 

THE  CHAIRMAN:  Your  statement  was  very  interesting,  sir. 
We  thank  you  for  that  presentation,  Mr.  Green. 

151 


Third  Session — Monday  Evening 


Is  there  a  representative  of  Bradstreet's  Company  here? 
Is  Mr.  Strobhart  in  the  room?  He  was  here  earlier. 

MR.  WYMAN:  May  I  ask  R.  G.  Dun  &  Company's  repre- 
sentative just  one  question?  That  is,  what  steps  do  you  take 
to  secure  information  on  request  when  there  is  no  information  in 
your  files  here?  In  other  words,  what  is  the  process  you  go 
through.  What  is  the  greatest  speed  with  which  reports  can  be 
obtained,  and  what  would  be  the  cost  of  obtaining  those  reports  ? 

MR.  GREEN:  I  would  say,  sir,  that  while  our  files  are  very 
complete,  we  do  not  profess  to  have  reports  on  everybody  on 
hand,  but  we  do  find  data  on  about  80  per  cent,  of  all  the  inquiries 
that  come  in. 

If  an  inquiry  comes  in  for  a  house  that  we  do  not  have  a 
report  on  file  about,  we  communicate  with  the  office  covering  that 
territory,  if  it  is  a  case  of  that  kind.  If  not,  the  matter  has  to 
be  referred  to  one  of  our  reporters  or  correspondents. 

It  very  frequently  happens  that  while  we  may  not  have  a  re- 
port in  New  York,  some  of  the  European  offices,  in  London, 
Paris  or  any  of  the  centers  over  there,  may  have  full  informa- 
tion in  the  matter  inquired  of;  because  that  house  may  have 
been  in  the  habit  of  dealing  with  some  of  those  countries  and 
not  with  the  United  States,  up  to  this  time.  That  is  the  method. 

MR.  WYMAN:  I  thank  you. 

THE  CHAIRMAN:  Now,  gentlemen,  we  will  have  a  little 
rapid-fire  for  the  balance  of  this  period. 

Mr.  James  Matthews,  of  the  National  City  Bank,  will  tell 
us  what  that  bank  is  doing,  in  two  or  three  minutes,  in  the  way 
of  assembling  credit  information  on  foreign  merchants. 

MR.  MATTHEWS  :  I  did  not  come  prepared,  Mr.  Chairman. 

THE  CHAIRMAN:  I  did  not  expect  you  would.  (Laughter.) 

MR.  MATTHEWS:  In  fact,  I  did  not  know  how  broad  this 
discussion  would  be. 

We  are  somewhat  young  at  the  game  ourselves.  We  have 
been  engaged  in  it  about  a  year  and  a  half.  We  are  meeting,  I 
think,  with  essential  success,  in  getting  information  not  alone  on 
South  America  but  other  parts  of  the  world. 

In  South  America  we  have  five  branches.  We  have  also 
one  in  Cuba,  Havana. 

I  will  speak,  in  the  first  place,  about  the  work  at  Buenos 
Aires.  I  think  that  we  have  been  quite  successful  there.  I 
have  observed  a  number  of  financial  statements  coming  from  our 
representatives  there  which  reflect  a  high  state  of  intelligence 

152 


Means  for  Securing  Credit  Information 


existing  among  the  merchants  in  that  country.  It  has  been  a 
little  hard  to  get  thoroughly  acquainted  with  them,  to  get  in 
close  touch  with  them  in  order  to  get  satisfactory  information, 
but  we  have  experienced  men  there,  men  who  were  trained  in 
our  office  here,  and  who  know  what  is  required  to  meet  the  needs 
of  merchants  in  this  country;  and  I  think  anyone  who  will 
examine  the  reports  that  have  been  sent  to  us  from  them  would 
be  surprised  at  the  progress  that  has  been  made  in  getting 
reliable  information  from  financial,  business  and  moral  viewpoint. 

We  are  doing  very  nicely  in  Montevideo;  we  are  making 
very  good  headway  also  at  Rio  de  Janeiro,  at  Santos  and  at 
Sao  Paulo ;  not  so  fast,  I  might  say,  as  we  are  doing  in  Argentina. 
But  we  are  getting  good,  reliable  information  from  our  men, 
who  are  obtaining  the  entree  to  the  very  best  authorities  there, 
and  the  information  is  being  collated  in  much  the  same  manner 
as  it  is  being  done  in  this  country. 

We  had  some  difficulty  in  securing  detailed  financial  state-* 
ments,  but  we  must  expect  this.  Conditions  are  very  different 
there  from  here.  It  is  not  many  years  since  it  was  very  difficult 
to  secure  financial  statements  in  that  country.  We  do  not  get 
all  the  statements  we  want  today,  and  many  that  we  get  are 
not  thoroughly  reliable.  I  believe  the  merchants  in  those  coun- 
tries will  generally  become  accustomed  to  furnishing  statements; 
but  it  will  in  all  probability  take  several  years  to  educate  them 
into  doing  so.  We  are,  however,  receiving  very  intelligent 
statements  in  many  instances. 

A  great  factor  in  those  countries  in  getting  credit  informa- 
tion is  that  of  the  personal  equation.  We  naturally  go  very 
strongly  into  the  moral  character,  habits  and  business  capacity 
of  the  man;  we  examine,  as  far  as  possible,  into  his  turnover 
and  the  amount  of  capital  he  uses  in  his  business.  This  covers 
briefly  what  we  are  doing  there. 

Now  as  regards  Havana  (we  have  been  there  only  a  short 
time),  we  are  finding  a  somewhat  different  situation  there  from 
that  in  the  South  American  countries,  as  far  as  we  have  gone. 
But  we  have  men  there  also  who  have  been  trained  in  the  office 
here  and  who  understand  the  modus  operandi  of  collecting  in- 
formation in  a  manner  to  satisfy  the  wishes  of  business  men 
here. 

The  reports  received  from  there  are  quite  commendable,  for 
the  short  time  we  have  been  there,  as  to  the  knowledge  we  have 
of  the  country,  and  the  merchants'  standing  and  antecedents. 

153 


Third  Session — Monday  Evening 


We  have  been  assisted  to  some  extent  by  the  mercantile 
agencies  in  all  these  countries,  and  we  have  found  them  very 
useful  forces  toward  completing  our  information. 

The  manner  in  which  our  reports  are  being  accepted  by 
merchants  and  manufacturers  in  this  country  indicates  a  very 
strong  interest  in  the  character  of  information  that  we  are  giving. 

I  think  that  if  the  proper  precautions  are  taken  and  we 
get  at  the  people  down  there  the  right  way  we  shall  succeed  in 
getting  information  which  will  be  reliable  as  a  basis  for  credit. 

Of  course,  in  some  of  the  other  countries  in  South  Amer- 
ica our  experience,  so  far,  has  not  been  quite  as  successful  as 
it  has  been  in  the  countries  about  which  I  have  told  you. 

I  believe  that  in  Chile  it  is  extremely  difficult,  perhaps  more 
so  than  in  any  other  part  of  South  America,  to  get  reliable  credit 
information. 

We  hope  in  time  to  be  able  to  accomplish  the  most  satis- 
factory results,  and  I  have  no  doubt  we  shall,  if  we  exercise 
patience  and  indulgence  in  going  at  it  in  the  right  way.  There 
is  no  doubt  that  it  takes  tact  and  diplomacy.  You  have  to  ap- 
proach them  in  a  different  manner  to  that  which  you  follow 
under  the  conditions  existing  in  this  country.  As  one  of  the 
gentlemen  here  said  a  little  while  ago,  you  frequently  have  to 
take  it  up  in  a  social  way  in  order  to  get  the  desired  information 
from  a  man ;  but  by  cultivating  his  confidence  you  are  quite  likely 
to  get  the  information. 

I  think  that,  taking  it  as  a  whole,  the  standards  existing 
among  the  commercial  people  in  South  America  will  compare  very 
favorably  with  those  existing  in  this  country. 

I  think  that  we  shall  all  have  to  work  hard  to  develop  the 
proper  manner  of  getting  information  such  as  we  desire,  and  that 
we  shall  have  to  work  it  out  slowly;  but  I  think  it  will  surely 
come.  There  have  been  times  in  this  country  when  we  have  not 
been  able  to  get  information  any  better  than  we  are  doing  in 
South  America  today;  but  through  the  exercise  of  proper  in- 
telligence we  have  worked  up  a  very  high  standard  of  credit  in- 
formation in  the  United  States.  I  think  this  is  all  I  can  say  to  you 
in  this  short  time. 

THE  CHAIRMAN  :  Just  one  question,  which  I  know  is  bobbing 
around  in  the  gray  matter  of  these  gentlemen ;  you  are  gathering 
that  information.  Now,  how  can  they  get  it  ? 

MR.  MATTHEWS  :  They  can  get  that  information  by  applying 
to  the  National  City  Bank. 

154 


Means  for  Securing  Credit  Information 


THE  CHAIRMAN:  By  applying  to  the  National  City  Bank? 

MR.  MATTHEWS  :  Yes.  We  will  do  the  best  we  can  to  assist 
them.  In  the  organizing  of  our  credit  facilities  in  those  coun- 
tries we  are  doing  it  with  a  view  to  assisting  American  industry 
in  general,  and  any  reliable,  worthy  concern  can  get  the  informa- 
tion, if  we  have  it.  If  we  have  not  got  it  we  will  endeavor  to  get 
it  for  them.  (Applause.) 

It  makes  no  difference  if  they  have  no  account  with  us. 
We  are  willing  to  help  them  along  for  the  general  good  of 
American  trade.  We  naturally  desire  to  derive  some  benefit 
from  this  service,  but,  at  the  same  time,  we  feel  that  there  is 
a  certain  amount  of  pioneer  work  to  be  done,  and  that  in  due 
time  we  shall  get  our  share  of  the  results. 

THE  CHAIRMAN  :  Now,  gentlemen,  that  is  Mr.  James  Mat- 
thews, of  the  National  City  Bank.  Put  that  down  in  your  memo- 
randum book,  that  he  makes  that  statement.  (Applause.) 

MR.  SMITH:  What  charge  do  they  make  for  those  reports? 

MR.  MATTHEWS:  There  is  no  charge  for  information  which 
we  furnish. 

THE  CHAIRMAN  :  That  must  not  be  looked  upon  as  competi- 
tion. 

MR.  MATTHEWS  :  None,  whatever.  We  cannot  be  regarded 
as  a  mercantile  agency.  As  I  have  just  said,  we  expect  some 
business  will  develop  through  that  service,  and  that  we  shall  get 
a  share  of  it.  At  the  same  time  we  do  not  restrict  a  man  to 
putting  his  exchange  through  us.  He  is  at  liberty  to  put  it 
through  other  banks,  if  he  so  desires. 

THE  CHAIRMAN  :  Mr.  Matthews  wants  you  to  understand  that 
the  National  City  Bank  is  not  working  entirely  for  glory.  Their 
financial  statements,  I  think,  are  a  sufficient  demonstration  of 
that.  (Laughter.) 

Mr.  Gonzales,  do  you  want  to  say  a  word  about  your  work  ? 
These  gentlemen  are  getting  a  little  impatient,  and  I  am  going 
to  close  this  Conference  at  eleven  o'clock.  Mr.  Gonzales  will 
tell  us  something  about  his  means  of  assembling  this  information. 

MR.  GONZALES:  The  National  Association  of  Manufacturers 
does  not  maintain  branches  or  agencies. 

We  do  not  supply  information  on  credits  for  profit,  but  for 
service.  That  does  not  mean  to  reflect  on  the  people  who  are 
supplying  that  information  for  profit,  or  to  intimate  that  their 
information  is  less  good  than  ours,  but  is  simply  a  statement  of 
facts.  We  obtain  our  information  through  correspondents  that 

155 


Third  Session — Monday  Evening 


we  have  in  every  country  in  the  world.  We  have  several  cor- 
respondents in  each  place — banks,  merchants,  lawyers,  different 
kinds  of  people.  When  we  receive  that  information,  we  trans- 
late it  into  terms  comprehensible  to  our  members.  We  analyze 
it,  we  edit  it,  and  then  we  take  from  the  statements  that  the 
gentlemen  are  pleased  to  give  us,  their  information,  the  firms 
with  which  they  trade  in  this  country,  and  so  on;  so  that  when 
we  supply  information  to  our  members  in  regard  to  a  foreign 
firm  the  information  received  from  our  correspondents  and  from 
the  firms  in  this  country  with  whom  we  have  been  put  in  touch, 
we  extract  the  statements  that  have  been  given  us.  Of  course, 
we  comment  on  that,  sometimes.  We  telegraph  and  use  the  cable, 
when  necessary,  and  we  only  make  a  nominal  charge,  because 
if  we  do  not  do  that  some  members  would  get  the  service  and 
others  would  pay  for  it.  We  are  after  no  business  whatever. 
Our  view  is  only  to  promote  the  trade  of  the  country. 

THE  CHAIRMAN  :  Is  Mr.  Hart,  of  the  Royal  Bank  of  Canada, 
in  the  room?  We  would  like  to  hear  from  him.  We  thought 
we  would  like  to  have  a  word  from  him,  as  he  does  work  very 
much  like  that  of  the  National  City  Bank.  Is  Mr.  Harding  here, 
of  Brown  Brothers?  They  are  also  assemblers.  These  gentle- 
men do  not  seem  to  be  here.  I  do  not  know  why  they  got  away. 
They  did  not  sit  tight,  did  they  ? 

Mr.  Matthews,  did  you  want  to  say  a  word? 

MR.  MATTHEWS  :  One  word  more  I  wanted  to  say.  Perhaps 
I  did  not  understand  a  question  that  was  put  to  me.  When  we 
receive  these  reports  from  our  representatives  in  South  America 
they  come  into  our  credit  department,  and  there  they  are  gone 
over  and  compiled  into  reports  which  embody  all  of  the  essential 
points  of  information  necessary  to  obtain  a  clear  knowledge  of 
the  individual's  credit  standing.  That  is,  these  reports  are  care- 
fully gone  over  and  compiled  in  such  a  way  as  to  make  what  one 
would  call  a  readable  report. 

THE  CHAIRMAN  :  Gentlemen,  will  you  bear  in  mind  that  this 
is  being  assembled  as  showing  the  sources  for  securing  foreign 
credit  reports.  Mr.  Gonzales  has  spoken  for  their  excellent  work. 
We  have  had  the  agencies'  and  we  have  had  the  banks'  method 
of  assembling  this  information.  Is  it  customary  to  ask  the  foreign 
merchant  directly  for  information?  Who  can  say  a  word  about 
that? 

MR.  BROOKS  (Syracuse  Chamber  of  Commerce,  Syracuse, 
N.  Y.)  :  We  find  that  our  sales  department  can  ask  a  merchant 

156 


Means  for  Securing  Credit  Information 


very  often  directly  and  get  the  information,  not  as  to  the  assets 
and  liabilities,  but  as  to  their  references. 

When  we  are  shipping  goods  on  draft  we  are  asking  the 
man  at  the  other  end  to  extend  to  us  credit  or  confidence  in  our 
having  shipped  to  him  the  goods  he  has  ordered. 

In  opening  negotiations  with  a  firm  on  whom  we  cannot 
get  credit  information  through  the  customary  channels,  we  fre- 
quently ask  them  for  their  references  to  firms  with  whom  they 
are  doing  business,  and  we  get  that  because  we  preface  that 
with  our  references  and  tell  them  who  we  are,  how  big  we  are, 
giving  the  references  of  our  banks,  the  associations,  and  Cham- 
bers of  Commerce,  and  we  enclose  a  stamped  envelope  for  reply, 
using  their  own  stamp;  and  we  get  that  information  nine  times 
out  of  ten. 

THE  CHAIRMAN:  You  ask  directly,  Mr.  Gonzales,  in  your 
work? 

MR.  GONZALES  :  Yes.  We  send  a  blank  form  to  be  filled  out, 
and  in  ninety-nine  cases  out  of  a  hundred  it  is  filled  out. 

THE  CHAIRMAN  :  That  is  fine.  Is  there  anyone  else  who  de- 
sires to  speak? 

MR.  MORRELL  (Secretary  Franklin  Electric  Manufacturing 
Company,  Hartford,  Conn.)  :  Our  experience  has  been  just  the 
same  as  that  gentleman's.  We  give  these  people  all  the  informa- 
tion they  want  regarding  ourselves.  We  think  it  is  an  equal 
exchange.  That  is,  we  believe  that  when  we  are  perfectly  ready 
and  willing  to  give  them  all  the  information  they  want  about  our- 
selves that  they  generally  respond  immediately  to  the  requests 
for  the  information  that  we  want,  and  are  perfectly  reason- 
able in  giving  us  what  we  want. 

THE  CHAIRMAN  :  I  think  that  is  fine.    That  is  a  fine  thought. 

Has  anyone  else  just  a  word  on  that?  Is  it  customary  to 
ask  banks  or  neighbors  directly  of  the  merchants? 

MR.  HAUSS  (American  Chamber  of  Commerce,  Milan, 
Italy)  :  It  is  our  custom  down  there  to  get  our  information  en- 
tirely from  the  banks.  We  find  that  most  reliable.  We  can  get  it 
from  all  the  chambers  of  commerce  in  each  city  in  Italy,  for  in- 
stance. Every  reliable  merchant  must  be  registered  with  his  cham- 
ber of  commerce,  and  he  must  pay  taxes,  and  he  pays  taxes  on  the 
amount  of  business  that  he  does,  and  that  gives  a  very  good  line 
on  a  man's  responsibility  and  reliability.  We  have  no  trouble 
whatever  in  getting  safe  information. 

157 


Third  Session — Monday  Evening 


THE  CHAIRMAN  :  By  consulting  banks  and  chambers  of  com- 
merce where  the  merchants  are  registered? 

MR.  HAUSS:  Yes. 

MR.  SMITH:  Where  do  those  conditions  obtain? 

MR.  HAUSS  :  In  Italy. 

THE  CHAIRMAN  :  Has  anyone  else  a  word  to  say  with  respect 
to  other  countries,  of  inquiries  made  of  merchants?  It  seems  to 
me  that  we  have  brought  out  some  valuable  points  in  this  part 
of  the  discussion  for  our  education  as  credit  men. 

If  there  is  no  other  word  to  be  said  in  connection  with  this 
particular  branch  of  our  program  let  us  pass  to  the  other  subject, 
which  is :  How  shall  commercial  foreign  credit  granters  cooperate 
with  one  another  in  the  queries  of  foreign  credit  risks  ?  Who  will 
be  the  first  one  to  speak  on  that  subject  of  cooperation? 

MR.  BRADLEY:  I  want  to  say  that  in  Sao  Paulo  and  Rio 
and  Buenos  Aires  they  have  a  so-called  credit  clearing  house, 
on  the  same  order  as  we  have  domestic  in  this  country.  The 
war  has  done  some  good.  I  have  had  no  personal  experience  in 
this,  but  I  understand  as  a  result  of  the  moratorium  down  there 
the  people  have  organized  a  so-called  clearing  house  such  as  I 
have  spoken  of  and  that  it  is  working  wonderfully  well.  They 
have  this  certain  organization,  their  name  for  which  I  cannot 
remember  at  the  moment,  this  clearing  house  in  different  places, 
one  at  Sao  Paulo,  one  at  Buenos  Aires. 

THE  CHAIRMAN:  It  is  interesting  to  know  about  that.  We 
shall  be  glad  to  hear  from  someone  else  on  this  subject.  Who 
will  be  the  next  speaker? 

MR.  KEITH  :  I  have  been  troubled  recently  to  a  large  extent 
in  relation  to  this  subject  by  the  flood  of  inquiries  from  other 
manufacturers  throughout  the  United  States  who  have  desired 
credit  information,  but  who  do  not  seem  to  be  able  or  willing  to 
give  me  their  information  when  they  send  in  their  reports.  They 
are  questions  in  relation  to  the  standing  of  the  concern  and  our 
experience. 

It  has  been  a  custom  in  our  house  that  if  we  desire  informa- 
tion it  is  no  more  than  courtesy  that  we  write  a  letter  giving  our 
own  information  at  the  same  time  we  request  it  of  you.  We  have 
sometimes  fifteen  or  twenty  a  day  coming  into  our  office  in  re- 
lation to  foreign  concerns.  Some  manufacturers  seem  to  think 
that  we  sell  everybody,  and  they  send  in  a  whole  list,  and  we  pick 
out  the  ones  that  we  sell,  and  let  the  others  go,  because  we  don't 
know  anything  about  them;  but  it  seems  to  me  that  there  is  a 

158 


Cooperation  Between  Credit  Granters 


point  of  mutual  cooperation,  not  making  it  necessary  for  the 
merchant  who  gives  the  information  to  ask  in  return  for  his  in- 
formation that  they  give  theirs. 

MR.  WYMAN  :  There  is  in  New  York  among  the  very  many 
groups  of  exporters  one  little  unnamed  group  we  call  the  export 
luncheon  bunch,  and  it  chanced  at  this  noon  that  we  lunched  here ; 
and  the  topic  most  discussed  (after  our  friends  the  Federal 
Trades  Commission,  were  discussed  before  one  of  their  repre- 
sentatives) was  this  question  of  cooperation  between  manufactur- 
ers in  credits  and  in  collections. 

As  Mr.  Erickson,  our  credit  manager,  said,  "After  all,  credit 
is  a  question  of  getting  the  money." 

The  first  topic  we  took  up  was  getting  a  list  of  lawyers  who 
would  handle  collections.  We  have  lists  of  lawyers  in  this  country 
who  will  handle  them. 

Instead  of  putting  up  fifty  dollars,  as  one  gentleman  said, 
and  getting  nothing  but  a  request  for  more,  we  have  been  trying 
to  get  it  on  some  sane  basis  for  foreign  collections. 

There  is  one  phase  of  cooperation. 

The  other  phase  is  that  which  was  suggested  by  Mr.  Phillips, 
I  believe.  We  are  working  on  a  standard  for  credit  inquiries  be- 
tween manufacturers  in  the  United  States,  trying  to  keep  them 
down  within  the  limits  which  one  manufacturer  can  reasonably 
expect  of  another  manufacturer,  and  yet  have  it  contain  all  the 
elements  which,  in  our  limited  experience  will  aid  in  passing  on 
a  credit  risk.  I  think  possibly  Mr.  Phillips  could  extend  or  ex- 
pand that,  if  the  Conference  desires. 

THE  CHAIRMAN:  Mr.  Phillips,  would  you  say  a  word  on 
that? 

MR.  PHILLIPS:  I  hardly  think  that  needs  expansion,  except 
to  say  that  it  is  a  standard  universally  used  as  your  own  forms  in 
this  country  are  used,  certain  specific  questions  always  the  same, 
boiling  the  questions  down  to  as  few  as  possible,  all  vital  and  such 
as  will  give  real  information.  That  is  information  from  refer- 
ences in  this  country.  Probably  another  form  will  be  sent  out  to 
foreign  references,  banks,  business  houses,  who  can  give  informa- 
tion from  the  other  end. 

We  cannot  discuss  that  to  any  further  length  now,  but  those 
Interested  in  such  a  blank,  or  the  uniformity  of  foreign  credit 
information,  I  think,  will  be  able  to  avail  themselves  of  this  plan 
of  it  by  sending  a  letter  to  the  Foreign  Trade  Department  of  the 
National  Association  of  Manufacturers;  and  if  I  may  be  per- 

159 


Fourth  Session — Tuesday  Morning 


milled  to  make  that  suggestion  in  their  behalf,  those  handling 
the  matter  will  be  glad  to  extend  the  information  to  them. 

THE  CHAIRMAN  :  Gentlemen,  is  it  the  sense  of  this  Con- 
ference that  there  should  be  cooperation  between  the  granters  of 
foreign  credits  in  this  country?  Those  who  believe  in  that  will 
pledge  themselves  to  encourage  that  cooperation  on  a  reciprocal 
basis  by  raising  their  hands. 

That  is  fine.  I  think  we  have  now  dedicated  ourselves  to 
that. 

Gentlemen,  the  time  is  up. 

I  want  to  thank  you,  the  National  Association  of  Manu- 
facturers, Mr.  Benney  and  Mr.  Gonzales  for  this  privilege.  I 
hope  you  have  enjoyed  it.  I  believe  that  this  will  not  be  the 
end,  but  that  we  shall  carry  forward  this  movement  until  we 
become  experts  in  foreign  credits. 

I  thank  you  very  much.  (Applause.) 

(Whereupon,  at  11:00  o'clock  P.M.,  an  adjournment  was 
taken  until  Tuesday,  December  7,  1915,  at  10:00  o'clock  A.M.) 


FOURTH  SESSION 

Tuesday  Morning  December  7,  1915 

MR.  BENNEY  :  Gentlemen,  the  program  announces  as  the  pre- 
siding officer  at  this  session  and  for  the  afternoon  session  Mr. 
Theodore  C.  Search,  of  Philadelphia.  Colonel  Pope  is  unable 
to  be  with  us  this  morning,  and  the  pleasant  duty  of  introducing 
Mr.  Search  falls  upon  me.  Really  Mr.  Search  needs  very  little 
introduction,  I  think,  because  during  his  presidency  of  the  Asso- 
ciation from  1896  to  1902  he  made  the  organization  not  only 
known  nationally,  but  also  an  organization  of  international  in- 
fluence. 

I  take  great  pleasure  in  introducing  Mr.  Search.   (Applause.) 

MR.  SEARCH  :  Mr.  Benney  and  Gentlemen :  It  is  a  matter  of 
no  very  small  pleasure  for  me  to  preside  at  another  meeting  of 
the  Association,  and  especially  upon  subjects  that  are  so  inter- 
esting as  those  that  are  before  us,  and  where  so  many  people  from 
abroad  are  present  to  give  us  their  views  upon  them. 

I  was  not  here  yesterday  until  the  evening  session,  and  I 
must  say  I  thoroughly  enjoyed  it,  enjoyed  what  was  spoken,  and 
enjoyed  the  spirit  of  the  occasion;  and  from  the  way  we  are  start- 

160 


Committee  on  Recommendations 


ing  out  this  morning,  although  a  little  late,  judging  by  the  numbers 
that  are  before  me  and  those  that  are  coming  in,  I  think  we  will 
have  just  as  interesting  a  session  today. 

The  Committee  on    Recommendations 

The  first  duty,  I  believe,  of  the  Chairman  today  is  to  announce 
a  Committee  on  Recommendations,  and  the  following  gentle- 
men have  been  selected  as  that  Committee: 

Captain  William  P.  White,  Chairman,  Lowell,  Massachusetts 
(Lowell  Paper  Tube  Corporation). 

Honorable  P.  E.  Quinn,  New  York  City  (Deputy  Trade  Com- 
missioner of  New  South  Wales,  Australia). 

Leopold  Perutz,  New  York  City  (Schenker  &  Company, 
Vienna,  Austria). 

Antonio  Carlos  de  Several,  Bahia,  Brazil  (Chamber  of  Com- 
merce of  Bahia). 

J.  P.  Bell,  New  York  (Canadian  Bank  of  Commerce,  Toron- 
to, Canada). 

Eduardo  Carrasco,  Commercial  Delegate  of  Chile  to  the 
United  States. 

Francisco  Escobar,  New  York  City  (Chamber  of  Commerce 
of  Bogota,  Colombia). 

Baron  Jacques  de  Neuflize,  Paris,  France  (Chamber  of 
Commerce  of  Paris). 

W.  La  Gro,  Amsterdam,  Holland  (Netherlands  Trading 
Society). 

Count  Dr.  Riccardo  Gatteschi,  New  York  (Chamber  of  Com- 
merce of  Naples,  Italy). 

Trygve  Wettre,  Christiania,  Norway  (Chamber  of  Com- 
merce of  Christiania). 

Alberto  Falcon,  New  York  City  (Chambers  of  Commerce  of 
Lima  and  Arequipa,  Peru). 

Alexander  W.  Behr,  Moscow,  Russia  (Russian- American 
Chamber  of  Commerce,  Moscow). 

John  Aspegren,  New  York  City  (General  Export  Associa- 
tion of  Sweden). 

A.  B.  Farquhar,  York,  Pa.  (Chamber  of  Commerce  of  the 
United  States). 

E.  G.  Swift,  Detroit,  Michigan  (Parke,  Davis  &  Company). 
George  D.  Seldon,  Erie  City,  Pa.  (Erie  City  Iron  Works). 

F.  R.  Briggs,  Boston,  Mass.  (Thomas  G.  Plant  Company). 

161 


Fourth  Session — Tuesday  Morning 


Ernest  R.  Ackerman,  New  York  (Lawrence  Cement  Com- 
pany). 

Mark  W.  Selby,  Portsmouth,  O.  (The  Selby  Shoe  Company). 

Malcolm  D.  Jeffrey,  Columbus,  O.  (The  Jeffrey  Manu- 
facturing Company). 

Harris  Weinstock,  San  Francisco,  Cal.  (State  Market  Com- 
missioner). 

J.  Scott  Parrish,  Richmond,  Va.  (Richmond  Cedar  Works). 

A.  C.  Hahn,  Sheboygan,  Wis.  (Phoenix  Chair  Company). 

The  meeting  room  for  this  committee,  I  am  informed,  is 
on  the  floor  just  above  the  exhibition  room,  which  I  presume 
you  are  all  familiar  with,  on  the  opposite  side  of  the  hall. 

The  first  speaker  for  the  day  should  have  been  Mr.  John 
Clausen.  Mr.  Clausen  is  not  here,  but  he  has  prepared  a  paper. 
He  is  a  gentleman  of  wide  experience  in  foreign  banking,  and 
was  selected  as  one  of  the  American  delegates  to  the  Pan-Ameri- 
can Financial  Conference  held  at  Washington  last  spring. 

(Following  is  the  full  text  of  Mr.  Clausen's  paper:) 

International  Trade  As  a  Sign  of  National 
Prosperity 

By  JOHN  CLAUSEN, 

Manager  Foreign  Department,  The  Crocker  National  Bank  of  San  Francisco 

The  progressive  industrialization  of  the  United  States  of 
America  and  the  wonderful  growth  of  its  people,  have  caused  on 
the  one  hand  increasing  imports  of  commercial  products  and  on 
the  other  steadily  growing  exports  of  industrial  material  as  well 
as  foodstuffs,  with  the  gratifying  results  that  this  country  in  a 
large  measure  shares  in  the  world's  commerce. 

From  the  wave  of  interest  in  trade  expansions  with  foreign 
countries  it  is  very  apparent  that  our  energies  in  that  direction 
have  received  a  great  impetus  in  consequence  of  the  war  in  which 
Europe  is  so  unhappily  involved.  We  are  on  the  threshold  of  a 
new  era  in  international  relations  and  realizing  that  an  increased 
foreign  trade  is  a  vital  and  necessary  element  in  our  prosperity 
at  home,  the  wide-awake  and  erudite  business  man  will  grasp  the 
opportunity  and  in  coping  with  the  present  situation  wisely  pre- 
pare his  machinery  to  forcibly  enter  the  boom  in  the  world-wide 
trade  which  is  bound  to  be  experienced  in  the  years  that  are  to 
come. 

162 


International  Trade  As  a  Sign  of  National  Prosperity 

Conditions  are  now  peculiarly  set  for  our  merchants  to  in- 
crease their  business  with  foreign  countries  and,  while  it  is  fully 
appreciated  that  much  of  the  trade  which  the  rest  of  the  world 
transacts  with  us  at  present  is  being  diverted  under  compulsion, 
it  behooves  us  to  take  what  steps  we  can  to  establish  intimate  and 
satisfactory  relations  with  these  new  customers  that  will  assure 
continued  trading  even  after  our  European  contemporaries  again 
enter  the  field  of  competition. 

This,  however,  may  be  found  difficult  in  that  we  have  almost 
entirely  neglected  to  provide  avenues  and  means  of  international 
distribution  and  while  among  the  commercial  communities  there 
seems  a  full  recognition  of  the  very  great  opportunities  which  are 
offered  at  present  for  pushing  our  trade,  the  financial  difficulties, 
inadequate  transportation  facilities  and  the  lack  of  comprehen- 
sive knowledge  of  requirements  covering  conditions  of  foreign 
markets  everywhere  stare  us  in  the  face. 

The  need  for  foreign  outlets  has  not  been  a  mooted  question 
up  to  the  present  and  the  requirements  of  the  home  trade  have 
absorbed  the  attention  of  the  American  manufacturer,  with  the 
result  that  inquiries  from  abroad  received  but  casual  attention. 
In  recent  years,  however,  there  has  developed  a  special  demand  of 
the  export  business  to  establish  direct  communications  between 
the  producer  and  the  foreign  consumer  and  since  that  time  the 
subject  has  received  more  and  more  consideration.  If  we  wish  to 
compass  international  trade  we  must  be  prepared  to  meet  the 
needs  of  foreign  markets  which  necessarily  require  studies  along 
individual  and  competitive  lines. 

So  far  as  the  prosperity  arising  out  of  war  orders  is  con- 
cerned, that  is  something  of  an  ephemeral  nature,  but  neverthe- 
less, it  serves  to  supplement  and  greatly  increase  the  prosperity 
arising  from  the  natural  and  ordinary  progress  of  development. 
In  the  field  of  foreign  trade  there  will  be  many  articles  which 
we  cannot  supply  in  competition  with  Europe,  while  on  the  other 
hand,  by  reason  of  our  natural  resources,  geographical  position 
and  propinquity  to  certain  markets,  there  will  be  muc'h  we  can 
advantageously  produce  and  so  create  a  vast  and  favorable  com- 
merce— always  bearing  in  mind  that  the  psychology  of  getting 
and  holding  business  depends  largely  on  personality,  character  and 
efficiency. 

Four  Obstacles  to  Trade 

It  may  be  proper  to  consider  at  this  point  the  principal  ob- 
stacles which  now  impede  the  free  flow  of  trade : 

163 


Fourth  Session — Tuesday  Morning 


First :  American  Exports  are  in  general  carried  by  foreign- 
owned  vessels ; 

Second:  American  Tradings  —  sales  and  purchases  —  are 
financed  through  foreign  banks,  and  enormous  toll  annually  paid 
for  such  accommodations ; 

Third:  Oversea  Credit  Information,  indispensable  to  intel- 
ligent promotion  of  foreign  trade,  is  largely  sought  through  for- 
eign banking  channels; 

Fourth :  Only  men  of  broad  experience  will  be  able  to  suc- 
cessfully secure  foreign  trade  and  influence  business  opportuni- 
ties in  that  direction. 

Taking  the  above  factors  into  account  there  is  no  doubt  that — 
before  commerce  can  resume  its  normal  course — these  problems 
must  be  seriously  taken  under  advisement. 

It  is  a  well  recognized  fact  that  the  American  merchant  has 
been  at  a  disadvantage  in  regard  to  shipping  facilities  which  has 
proven  a  great  handicap  in  building  and  picking  up  the  trade  now 
being  neglected  by  our  contemporaries  in  the  old  world.  Our 
trade  problems  depend  greatly  on  transportation,  upon  which 
profitable  and  useful  commerce  so  much  relies.  We  need  a  mer- 
chant fleet  of  the  largest  size  and  of  the  latest  appointments.  The 
sentiments  of  our  President  when  he  acclaimed  that  "if  private 
capital  cannot  soon  enter  upon  the  venture  of  establishing  these 
physical  means  of  communication,  the  Government  must  under- 
take to  do  so"  expresses  a  belief  that  such  a  measure  would  prove 
of  immediate  relief  in  remedying  the  present  situation. 

While  land  transportation  has  engaged  our  first  attention  and 
been  developed  to  a  high  degree  of  profitable  efficiency,  private 
capital  has  concerned  itself  but  very  little  with  ocean  transporta- 
tion, with  the  result  that  foreign  ships  have  been  carrying  our  sea 
freights.  Necessarily  they  have  derived  enormous  profit  there- 
from, and  incidentally  routed  the  trend  of  the  trade  to  flow  into 
the  channels  most  beneficial  to  their  own  interests. 

The  situation  relating  to  trade  carrying  facilities  was  far  from 
satisfactory  even  in  normal  times,  and  our  commercial  expansion 
depended  largely  upon  transportation  offered  by  foreign  carriers, 
which  made  it  immeasurably  more  difficult  after  the  European 
war  was  declared. 

Obviously,  a  building  up  of  business  activity  is  not  to  be  ex- 
pected until  the  usual  channels  of  trade  are  opened  and  the  many 
financial  menaces  removed. 

Just  as  conditions  differ  in  the  various  sections  of  the  United 

164 


International  Trade  As  a  Sign  of  National  Prosperity 

States  so  do  we  find  a  great  diversity  in  systems  and  methods  of 
operation  in  foreign  countries.  It  becomes  necessary  for  us  to 
study  these  essential  requirements -in  seeking  adequate  channels 
for  expansion  of  our  import  and  export  trade  and  then  arrange 
for  the  corresponding  financial  support  to  establish  banking  con- 
nections in  caring  for  and  promoting  our  business  and  financial 
interests. 

Enlargement  of  Bank  Functions 

We  are  all  aware  that  there  is  an  undoubted  tendency  on  the 
part  of  our  commercial  element  to  encourage  enlargement  of  the 
scope  of  functions  performed  by  banks.  It  is  possible  that  the 
conservatism  natural  and  proper  to  bankers  leads  them  to  view 
such  progressiveness  too  critically,  but  just  as  the  conception  of 
a  banker's  function  has  been  vastly  widened  since  the  days  of  old, 
so  the  process  will  continue  in  the  days  that  are  to  come.  De- 
velopments of  this  kind  are  healthy,  and  wise  men  will  not  be 
disposed  to  obstruct  them. 

A  nation  that  would  prosper  in  international  trade  must  first 
become  a  world  banker — the  wealth  and  power  of  this  country 
entitles  it  to  a  position  of  leadership  in  every  market.  It  is  thought 
that  we  cannot  successfully  develop  our  foreign  relations  so  long 
as  it  is  necessary  to  operate  through  banking  institutions  of  com- 
peting countries,  and  while  the  Federal  Reserve  Act  provides  for 
the  establishment  of  branches  by  member  banks  in  foreign  coun- 
tries, it  is  felt  that  few  banks  care  to  assume  the  risk  separately. 
Jointly  owned  banks  would  appear  to  best  serve  the  requirements 
of  the  country  as  a  whole.  Cooperation  thrives  best  where  action 
through  association  is  legally  possible  and  practically  safe. 

The  new  Bank  Act  is  essentially  intended — as  a  commercial 
banking  system — to  assist  in  the  financing  of  our  internal  and 
external  trade  and  provide  a  market  for  commercial  acceptances 
based  upon  the  importation  and  exportation  of  goods — at  the  same 
time  create  a  basic  condition  of  automatic  registration  of  such 
operations,  which  is  a  very  vital  feature  to  prevent  over-extension 
of  credit.  In  the  case  of  time  bills  of  exchange  drawn  on  and 
accepted  by  banks  or  bankers  of  high  standing,  there  is  practical 
uniformity  of  security — which  cannot  be  claimed  for  "com- 
mercial paper"  with  which  the  financial  markets  here  are  supplied, 
the  strength  of  such  obligations  depending  upon  the  standing  of 
miscellaneous  commercial  interests. 

While  we  cannot  hope  to  see  the  New  York  or  San  Francisco 
bill  of  exchange  take  the  place  of  the  so  well  and  favorably 

165 


Fourth  Session — Tuesday  Morning 


known  bills  on  London,  Hamburg  or  Paris,  recent  events  and  dis- 
location of  the  financial  structure  in  Europe  have  at  least  brought 
the  possibility  before  the  commercial  world  and  tended  to  bring 
within  our  reach  the  power  of  competing  on  terms  of  equality 
with  our  European  contemporaries. 

The  power  of  a  bank  to  accept  a  draft  or  bill  of  exchange 
enables  it  to  make  use  of  and  to  sell  for  a  consideration  its  credit, 
and  so  lend,  for  legitimate  use  in  trade,  vast  sums  without  deplet- 
ing its  reserve  or  impairing  its  capability  in  making  additional 
loans  and  advances  to  its  clients. 

Differences  in  State  Banking  Laws 

Whereas  the  Act  permits  member  banks  to  accept  bills  of  ex- 
change they  are  not  at  present  authorized  to  extend  such  facilities 
to  clients  for  the  acceptance  of  draft  covering  domestic  trans- 
actions, although  the  New  York  banking  law  gives  permission 
to  State  banks  and  trust  companies  of  extending  these  facilities 
for  both  foreign  and  domestic  transactions.  This  is  likewise  the 
case  in  Maryland,  Utah,  Vermont  and  Texas — the  latter  re- 
stricted to  foreign  acceptances  only — but  the  laws  of  other  States 
carry  no  provision  for  banks  extending  to  their  customers  the  use 
of  its  credit  in  the  development  of  commercial  relations  and  it 
would  seem  apparent  that  State  bank  legislation  throughout  the 
United  States  should  be  amended  to  harmoniously  conform  to 
the  new  and  better  system. 

A  merchant,  for  instance,  instead  of  borrowing  cash  on  a 
note  from  his  banker  may  arrange — for  a  stipulated  commission 
charge — to  use  the  bank's  credit  for  a  certain  length  of  time  and 
a  given  amount.  To  make  use  of  such  facilities  a  time  draft 
may  be  issued  against  the  bank,  which  in  turn  gives  the  required 
acceptance.  After  this  requisite  has  been  secured  the  merchant 
is  in  position  to  either  use  the  bill  of  exchange  in  the  settlement 
of  his  trade  obligations  or  sell  same  through  a  bill  broker  in  the 
open  market  and  so  obtain  available  cash.  The  small  merchant's 
paper — endorsed  by  his  bank — is  as  acceptable  as  that  of  the 
largest  merchant  or  corporation,  backed  as  it  is  by  security  of  the 
bank  and  therefore  readily  discountable  by  virtue  of  its  high  in- 
trinsic security  as  the  most  liquid  form  of  investment. 

The  world's  commerce  is  almost  in  its  entirety  financed  by 
bills  of  exchange,  which  in  turn  act  as  an  index  to  the  value  of 
money.  Increased  trade — both  domestic  and  foreign — very  log- 
ically brings  about  a  corresponding  demand  for  credit,  and  while 

166 


International  Trade  As  a  Sign  of  National  Prosperity 

it  may  be  comparatively  easy  to  create  credit,  it  is  often  a  difficult 
matter  to  protect  it,  which — economically  claimed— can  only  be 
done  by  maintaining  an  adequate  amount  of  gold. 

The  Federal  Reserve  Banks'  Advantages 

The  Federal  Reserve  bank  with  its  holding  of  "gold  and 
lawful  money"  can,  for  this  reason,  very  effectively  find  employ- 
ment of  its  resources  in  fostering  and  rendering  assistance  in  the 
financing  of  our  trade,  as  also  in  the  creation  of  a  broader  market 
in  foreign  centers  for  the  American  bank  credit,  and  especially 
in  the  recogition  of  the  United  States  dollar  acceptance. 

The  matter  of  a  ready  discount  market — comparing  favor- 
ably with  prevailing  conditions  in  principal  centers  abroad — is 
worthy  of  very  serious  consideration  and  while  the  feature  of  dis- 
count and  rediscount  provided  for  in  the  Federal  Reserve  Act 
may,  in  the  main,  be  regarded  as  in  the  nature  of  a  safety  meas- 
ure, it  is  hoped  that  as  a  principal  aid  to  a  more  liberal  system 
of  financing  our  domestic  and  foreign  trade  the  American  market 
may  effectively  adjust  its  rates  to  conform  with  those  prevailing 
in  other  financial  centers  of  the  world. 

Of  course,  the  value  of  money  apart  from  the  question  of 
whether  the  open  market  rate  of  discount  is  slightly  under  or 
over  the  Federal  Reserve  bank  rate  will  be  governed  by  the 
strength  of  that  institution,  and  the  prospect  of  a  demand  upon 
its  stock  of  gold  reserve,  as  is  the  case  with  our  British  friends 
and  their  relations  with  the  Bank  of  England. 

Single  name  paper  will  not  create  a  discount  market  as  we 
find  in  London,  Paris  and  Germany,  where  the  fluctuations  of 
rates  so  largely  depend  on  the  demand  for  and  supply  of  market- 
able bills  of  exchange,  which  owe  their  origin  to  trade  transac- 
tions as  balanced  against  the  demand  for  and  supply  of  money. 
Low  discount  rates  are  an  incentive  to  the  revival  of  trade,  and 
advancing  rates  in  turn  act  as  a  natural  check  on  trade  and  pro- 
duce a  gradual  increase  or  decrease  in  the  demand  for  money. 

While  these  conditions  are  symptoms  in  governing  the  dis- 
count rates  in  Europe,  our  "call  loan"  rate  as  quoted  in  our 
Eastern  markets  only  has  an  indirect  relation  to  trade  conditions, 
and  registers  mainly  the  speculative  demand  for  stocks. 

On  the  efficiency  of  the  Federal  Reserve  Act  must  depend  to 
a  large  extent  the  prospects  of  a  great  and  favorable  change  in  the 
international  position  of  the  United  States  which  will  now  enter 

167 


Fourth  Session — Tuesday  Morning 


into  the  competitive  field  of  operations  of  other  great  financial 
nations. 

While  individual  opportunities  are  even  now  offering  them- 
selves to  our  enterprising  business  men,  the  general  prosperity  of 
foreign  trade  expansions  can  only  be  guaranteed  by  a  ready  co- 
operation of  all  elements  in  our  national  and  commercial  strength. 

Education  Needed  for  the  Foreign  Field 

Our  attention  is  daily  called  to  the  scarcity  of  available  young 
men  who  in  a  competent  and  honorable  manner  are  qualified  to 
occupy  positions  of  trust  and  responsibility.  To  meet  this  crying 
demand  of  the  commercial  world  too  little  importance  is  given 
to  the  necessity  of  finding  a  common  ground  on  which  the  busi- 
ness man  and  the  educator  can  meet  and  solve  the  great  problem 
for  a  better  cooperation  in  the  national  movement  of  fostering 
trade  relations.  In  this  period  of  our  civilized  development,  we 
must  not  only  be  impressed  with  the  thought  for  betterment  but 
with  the  material  means  to  engender  that  thought  into  practical 
application  and  effect  and,  consequently,  every  encouragement 
should  be  afforded  the  matter  of  providing  for  the  establishment 
of  schools  of  commerce  to  pursue  a  regular  study  of  commercial, 
intellectual  and  cultural  relations  between  the  various  peoples  of 
the  world,  keeping  pace  with  the  corresponding  commercial  and 
political  developments. 

If  we  accept  the  assertion  of  the  Sage  Foundation,  that  only 
five  percentum  of  the  males  in  the  United  States  are  prepared  by 
definite  education  for  their  occupations  in  life,  it  is  readily  con- 
ceived that  our  present  courses  of  early  studies  are  wholly  inade- 
quate to  meet  the  need  of  our  young  element,  who  in  such  a  large 
percentage  plan  for  a  commercial  career.  It  would  seem  that  the 
first  forward  step  to  devise  effective  courses  of  study  and  devel- 
oped methods  of  commercial  attainments  would  be  to  unite  the 
educational  agencies  in  promoting  the  move  of  specialization  in 
instructions  for  the  most  direct  preparatory  training. 

A  young  man  with  a  theoretical  commercial  training  and  the 
additional  linguistic  attainments  brought  about  by  such  a  course 
would  assuredly  prove  of  infinitely  more  value  to  his  employer 
in  many  fields  than  one  who  lacks  such  qualifications. 

This  leads  to  the  question  of  greater  importance  to  our  cap- 
tains of  industry — the  appointment  of  agents.  It  is  not  sufficient 
that  the  representative  be  well  connected  and  of  good  financial 

168 


International  Trade  As  a  Sign  of  National  Prosperity 

standing,  but  above  all  it  is  essential  that  he  have  a  thorough 
knowledge,  both  technical  and  practical,  of  the  negotiations  which 
he  proposes. 

The  best  man  in  a  business  concern  is  the  only  right 
one  to  influence  trade  opportunities  such  as  have  been  suddenly 
offered  to  us  by  the  misfortune  of  the  great  industrial  nations  of 
the  world,  and  if  our  business  leaders  wish  reciprocal  trade  they 
must  therefore  not  send  representatives  with  only  slight  knowl- 
edge of  ethics  in  business  but  rather  men  of  the  broadest  ex- 
perience, able  to  cope  with  the  problems  presented. 

Success  in  any  one  line  or  for  any  one  man  means  prosperity 
for  several  others,  and  it  is  therefore  not  so  essential  that  every 
merchant  or  manufacturer  here  should  engage  in  the  foreign 
trade  so  long  as  those  who  do  not  are  willing  to  afford  their 
moral  support  in  a  move  which  ultimately  will  redound  to  the 
benefit  of  all. 

A  combination  of  circumstances  and  forces — economic,  po- 
litical and  moral — is  bringing  us  each  day  to  a  fuller  realization 
of  the  part  we  are  called  upon  to  play  in  giving  to  the  world  an 
example  of  the  possibility  and  practicability  of  international  coop- 
eration. 

As  the  United  States  of  America  enters  into  the  international 
arena  it  becomes  more  and  more  apparent  that  national  solidar- 
ity should  be  carefully  built  up  and  consistently  nourished.  Our 
country  is  larger  than  any  national  unit  which  has  ever  taken  a 
world's  part  in  history.  It  appears  to  me  that  our  problems  will 
consequently  be  greater  and  that  they  will  require  a  sounder  and 
more  consistent  study  than  it  has  been  necessary  to  devote  to 
our  problems  during  the  rich  days  of  our  youthful  and  almost 
boundless  development.  When  the  United  States  faces  the  mar- 
kets of  the  world  there  should  not  be  a  Western  or  an  Eastern 
point  of  view  to  be  met  by  our  foreign  customers.  We  should  be 
united,  not  merely  in  our  loyalty  to  the  flag,  but  in  the  intelligent 
understanding  of  all  the  fundamentals  of  our  business  and 
economic  life. 

May  I  affirm,  in  conclusion,  that  in  the  matter  of  our  foreign 
trade  expansion  the  measure  of  success  will  largely  depend  upon 
our  ability  to  organize  in  meeting  the  strong  competition  of  our 
European  friends,  and  if  we  are  to  become  the  financial  center 
of  the  world,  we  must  prepare  ourselves  to  retain  the  advantages 
attached  therewith — as  well  as  all  its  responsibilities  and  obliga- 
tions. 

169 


Fourth  Session — Tuesday  Morning 


THE  CHAIRMAN:  The  second  subject  before  us  is  one  that 
is  always  of  importance  in  trade,  whether  it  is  domestic  or  for- 
eign, and  of  special  importance  at  this  time. 

The  title  of  the  paper  is,  "Credits  Against  Imports  and 
Exports,"  prepared  by  Mr.  Seebeck,  a  gentleman  who,  from 
his  experience  and  position  with  the  well-known  bank  which  he 
represents,  is  well  qualified  to  speak  on  the  subject.  I  have 
pleasure  in  introducing  to  you  Mr.  George  Seebeck. 


Credits  Against  Imports  and  Exports 

By  GEORG  VON  SEEBECK 

Guaranty  Trust  Company  of  New  York 

Two  questions  are  of  great  interest  in  the  present  state  of 
economic  development  in  the  United  States,  and  they  have  already 
been  widely  discussed. 

The  first:  Can  the  United  States  maintain  the  position  it 
has  attained  in  international  commerce  and  finance  since  the 
outbreak  of  the  European  conflict? 

The  other:  How  can  international  trade  relations  now  and 
after  the  war  be  further  developed  and  firmly  established  for  the 
future  ? 

The  present  war  has  reversed  the  position  of  the  United 
States  from  a  borrowing  to  a  creditor  nation,  and  consequently 
there  is  a  tendency  toward  broadening  the  horizon  of  our  com- 
mercial aspirations.  From  the  domestic  field  of  business,  still  in 
its  full  process  of  exploitation,  our  aims  have  been  extended  far 
beyond  the  States  and  have  become  an  international  problem  of 
vital  importance  and  unlimited  possibilities. 

Importance  of  Credit  Development 

It  is  especially  the  development  of  our  credit  system  to 
which  we  should  direct  our  attention,  if  we  do  not  wish  to  impede 
the  present  tendency  of  commercial  extension.  Credit  is  the 
foundation  of  all  large  trade  operations.  It  was  by  the  master- 
ful and  energetic  handling  of  this  problem  and  by  constantly 
applying  and  developing  its  beneficial  influence,  that  the  countries 
prominent  in  international  commerce  secured  their  firm  position 
in  the  world  markets.  The  power  and  the  wealth  of  Great 
Britain  and  of  Germany  are  due  in  great  measure  to  their 
achievements  in  oversea  trade. 

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Credits  Against  Imports  and  Exports 


The  basis  for  the  successful  commercial  attainments  of  these 
countries  is  to  be  found  in  the  underlying  system  of  credits 
granted  by  bankers  to  importing  and  exporting  houses.  Similar 
and  just  as  effective  results  may  be  obtained  for  Americans  by 
combined  efforts  along  the  same  lines. 

The  principal  points  to  be  examined  more  closely  are  the 
past  and  present  application  of  banking  credit  arrangements  and 
the  possibilities  of  extending  same  further  and  more  in  con- 
formity with  the  various  practices  of  other  countries  doing  an 
international  business. 

Americans  had  made  their  way  and  established  their  place  in 
the  export  field  before  this  war  by  the  sheer  excellence  of  their 
products  and  by  their  remarkable  enterprise.  They  did  not  have 
nearly  the  same  accommodations  and  assistance  as  English, 
French  or  German  houses  with  old  established  relations,  oversea 
branch  offices,  and  extensive  banking  connections.  The  main 
difficulty  in  the  United  States  has  always  been  connected  with 
the  question  of  credit. 

Foreign  credit  is  needed  by  the  customer  for  various  reasons. 
In  many  cases  the  buyer  of  the  merchandise  is  in  a  position  to 
pay  the  exporter  only  after  having  in  turn  himself  sold  his 
goods  to  his  customer.  In  other  cases  the  importer  can  remit 
only  after  the  returns  from  his  own  sales  are  received,  and 
these  are  subject,  in  numerous  instances,  to  results  at  certain 
seasons  of  the  year  and  other  trade  conditions.  Furthermore, 
in  many  countries  the  buyer  of  goods  wishes  to  remit  when  ex- 
change is  profitable,  which  practically  amounts  to  the  same  thing : 
namely,  that  he  desires  to  wait  for  the  time  of  the  principal  ex- 
ports of  his  country. 

Restrictions  Due  to  Credit  Conditions 

It  has  often  been  stated  that  the  American  exporter  is  placed 
in  an  awkward  position  in  comparison  with  others  by  not  being 
able  to  grant  the  same  long-term  credit  that  they  do.  He,  for 
many  reasons,  requires  payment  in  cash  at  New  York  against 
documents.  One  reason  for  this  being  the  fact  that  losses  have 
been  incurred  through  granting  long-term  credit.  The  granting 
of  long-term  credit,  however,  is  a  necessity  to  the  customer,  and 
means  must  therefore  be  found  to  help  the  American  exporter 
to  meet  this  condition.  It  is  true  that  in  a  way  the  American 
foreign  trade  developed  during  this  war  is  inclined  only  to 
strengthen  American  exporters  in  their  belief,  and  to  further 

171 


Fourth  Session — Tuesday  Morning 


accustom  them  to  this  habit  of  receiving  cash  against  delivery  of 
the  documents  here. 

Large  quantities  of  goods,  especially  metal  products,  are  ex- 
ported to  Europe  at  present  and  paid  for  in  cash  here ;  but  can  you 
expect  an  importer,  in  normal  times,  to  pay  for  the  goods  before 
he  himself  makes  sure  whether  or  not  they  are  in  accordance 
with  his  contracts  and  arrangements  ?  Just  now  this  kind  of  busi- 
ness is  facilitated  by  a  large  number  of  foreign  agents  and  com- 
missions in  this  country,  who  inspect  the  merchandise  on  behalf 
of  the  buyers.  Of  course,  the  advantage  for  the  exporter  is 
obvious  if  he  can  obtain  cash  credits  over  here  or  even  confirmed 
and  irrevocable  cash  credits  established  with  reliable  American 
banking  institutions,  and  nobody  would  ask  him  to  give  up  such 
terms  as  long  as  they  are  obtainable. 

Timely  Preparation  Desirable 

We  must,  however,  bear  in  mind  that  the  only  reason  for 
these  unusual  facilities  and  quick  settlements,  causing  such  great 
liquidity  in  the  American  money  market,  is  due  to  quite  ex- 
ceptional circumstances.  Now  is  the  time  to  prepare  for  the  con- 
dition which  must  prevail  after  this  war,  when  the  European 
nations  will  set  to  with  all  their  might  and  power  to  regain 
in  the  world  markets  their  old  positions  which  may  for  the  time 
being  have  passed  into  American  hands.  It  is  not  a  question  of 
taking  advantage  of  the  present  unhappy  situation  of  our  Eu- 
ropean friends,  but  to  secure  for  our  own  markets  that  place  in 
the  world  trade  which  belongs  to  them  by1  every  natural  right  in  ac- 
cordance with  the  growing  wealth,  power  and  influence  of  the 
United  States. 

Embarrassments   of   Long   Credits 

There  are,  of  course,  various  respects  in  which  the  American 
trader  lacks  the  same  facilities  naturally  enjoyed  by  the  European 
merchants.  They  complain,  and  rightly  complain,  of  unreliable 
credit  information,  of  difficulty  in  defending  themselves  legally 
in  foreign  countries  if  any  differences  should  arise  with  their 
customers,  and  last  but  not  least,  of  the  tie-up  of  capital  through 
having  to  grant  long  term  credit. 

In  some  of  these  respects  European  merchants  have  profited 
through  their  oversea  branch  offices,  able  to  supply  them  with  in- 
formation and  legal  protection  when  necessary.  They  therefore 
have  an  advantage  over  the  exporter  who  has  to  ship  his  goods 
to  a  more  or  less  unknown  party  and  consequently  looks  upon 

172 


Credits  Against  Imports  and  Exports 


this  line  of  'business  as  uncertain  and  risky.  These  difficulties 
are  gradually  being  lessened,  and  eliminated  to  a  large  extent  by 
the  help  and  cooperation  of  American  banks. 

Difficulties  Easily  Surmounted 

American  bankers  have  established  in  these  last  years  such 
an  extensive  and  reliable  net  of  correspondents  that  it  ought  not 
to  be  difficult  for  our  merchants  and  manufacturers  to  obtain 
good  credit  information  about  the  concerns  abroad  with  whom 
they  seek  to  enter  into  business  relations. 

The  inconvenience  of  granting  credit  facilities  to  customers 
is  not,  or  rather  ought  not  to  be  a  reason  for  refraining  from 
selling  goods  to  foreign  customers;  this,  however,  has  been  the 
principal  drawback  in  recent  years.  Since  American  bankers  are 
in  a  position  to  grant  the  same  or  similar  credit  facilities  against 
shipments  of  merchandise  as  the  European  oversea  banks,  this 
obstacle  must  and  will  be  overcome  in  the  course  of  development 
and  in  proportion  to  the  growth  of  the  business. 

Development   of   International  Trade  Through  Bankers'  Assistance 

There  are  various  methods  by  which  international  trade  can 
be  developed  through  the  banker's  assistance. 

Evidently  it  is  not  the  lack  of  enterprise  on  the  part  of  the 
manufacturer  that  is  in  any  way  prohibitive  of  an  increase  in 
our  foreign  trade.  However,  the  manufacturer  himself  should  in 
most  cases  not  be  the  man  to  attend  to  the  foreign  trade  end  of  his 
business,  which  is  especially  desirable  for  exports  to  the  unde- 
veloped countries  requiring  different  methods  of  forwarding, 
packing,  and  selling,  knowledge  of  native  customs,  languages,  and 
peculiarities  in  their  currency.  If  we,  for  instance,  look  at  the 
foreign  method  we  find  that  to  a  large  extent  the  manufacturer  is 
paid  in  cash  by  the  exporter  and  that  the  large  exporting  and  im- 
porting firms,  with  the  assistance  of  the  banker,  take  upon  them- 
selves the  task  of  giving  long  term  credit  to  their  foreign  cus- 
tomers and  also  undertake  the  risks  connected  with  the  shipping 
of  the  goods. 

The  reason  for  this  is  that  the  manufacturer  like  the  small 
farmer  or  planter  cannot  undertake  to  tie  up  his  capital  to  any 
large  extent.  Besides,  he  has  not  the  experience  in  handling  the 
business  and  in  the  placing  of  his  merchandise  on  the  foreign  mar- 
kets. It  would  cost  him  years  of  experience,  expense,  and 
perhaps  loss,  to  undertake  foreign  trade  himself;  whereas,  the 

173 


Fourth  Session — Tuesday  Morning 


exporter,  who  is  in  constant  touch  with  the  markets,  knows  their 
requirements  as  to  quantities,  seasons  and  all  the  conditions  and 
is  in  a  much  more  favorable  situation  to  undertake  such  business. 
He,  on  his  part,  should  only  have  to  arrange  with  the  banks  to 
collect  payment  or  to  obtain  further  credit  on  his  shipments. 

The  Best  Known  and  Most  Common  Way 

This  is  for  banks  to  grant  credit  to  exporters  by  purchasing 
their  drafts  on  their  customers  or  the  customers'  banks.  Either 
the  documents  are  attached  to  the  draft,  in  which  case  the  bank 
retains  a  lien  on  the  goods,  or  the  bank  purchases  the  clean  draft 
without  documents  and  the  commercial  end  of  the  transaction 
is  left  entirely  between  the  buyer  and  the  seller.  In  both  cases, 
however,  the  bank  has  recourse  on  the  drawer  of  the  draft,  and 
therefore  grants  credit  according  to  his  financial  responsibility. 
If  the  documents  are  attached  to  the  draft  they  are  either  de- 
livered against  payment,  which  releases  the  bank  of  any  further 
risk,  or,  against  acceptance  or  trust  receipt,  in  which  case  these 
latter  documents  take  the  place  of  the  security.  Necessary  in- 
structions are  given  by  the  shipper  about  the  delivery  of  the  docu- 
ments, protest  in  case  of  non-payment  or  non-acceptance,  or  of 
disposal  of  the  shipment. 

Not  alone  is  the  financial  responsibility  of  the  exporter  es- 
sential to  a  bank  as  the  basis  of  granting  credit.  It  also  depends 
upon  the  nature  of  the  merchandise,  the  drawee,  and  the  country 
to  which  the  goods  are  exported.  Drafts  on  commercial  houses 
in  South  America  or  the  Far  East,  for  instance,  are  mostly  not 
being  purchased,  but  taken  for  collection,  and  it  is  for  the  banker 
to  decide  as  to  making  advances  on  such  collections.  Here  again 
the  financial  responsibility  of  the  exporter  is  the  basis  of  the 
credit  advances. 

Novel  Conditions  in  Overseas  Trade 

A  new  phase  in  financing  export  shipments  from  this  coun- 
try is  the  acceptance  by  American  banks  of  60  or  90  days 
sight  drafts  drawn  on  them  by  the  exporters  for  their  ship- 
ments. Drafts  on  the  customer,  with  supporting  documents,  are 
sent  out  for  collection,  and  the  proceeds  used  as  cover  of  the 
original  acceptance.  In  the  event  of  the  proceeds  not  being  on 
hand  upon  maturity  of  the  acceptance,  cover  must  be  provided 
by  the  shipper  of  the  goods,  or  arrangements  will  have  to  be 
made  for  a  renewal  of  the  acceptance.  The  bank  charges  a  com- 
mission for  accepting  in  proportion  to  the  length  of  time  the  draft 

174 


Credits  Against  Imports  and  Exports 


has  to  run.  The  shipper  is  able  to  discount  these  bank  acceptances 
in  the  market,  and  is  thereby  able  to  finance  his  exports  on  a  very 
advantageous  basis. 

In  many  cases  a  bank  may  insist  upon  discounting  its  own 
acceptances  at  a  prearranged  rate  of  interest.  For  the  shipper  this 
acceptance  credit  amounts  to  nothing  else  than  a  current  advance. 
It  makes  no  difference  for  the  banker,  who  can  rediscount  liis  ac- 
ceptance in  the  market  and  thereby  avoid  a  tie-up  of  funds. 

Credit  Against  Imports 

The  question  of  obtaining  credit  against  the  importation  of 
merchandise  is  much  simpler  and  easier  for  the  importer  in  so  far 
as  he  will  not  find  any  difficulty  in  obtaining  credit  according  to  his 
moral  and  financial  standing.  It  is  also  easier  for  the  banks,  be- 
cause they  are  much  better  acquainted  with  the  financial  and 
moral  standing  of  their  own  domestic  clients  and  can  control  the 
merchandise  on  receipt  of  the  documents. 

If  an  American  bank  undertakes  to  accept  drafts  against  the 
importation  of  merchandise,  the  custom  is  for  it  to  deliver  the 
documents  to  the  buyer  against  his  trust  receipt,  and  the  tran- 
saction changes  from  a  foreign  to  a  domestic  loan.  The  com- 
mercial letter  of  credit  business  is  nothing  new  to  the  American 
trader  and  importer,  and  I  need  not  go  into  details  about  it. 

Commercial  Letters  of  Credit  for  Foreign  Importers 

There  also  is  another  method  of  granting  commercial  letters 
of  credit  to  foreign  customers  for  their  importation  of  mer- 
chandise. In  this  case  both  the  foreign  importer  and  the  do- 
mestic exporter  get  their  accommodation  through  the  American 
bank.  This  line  of  foreign  customers  consists  mostly  of  banking 
institutions  abroad  requesting  the  American  banker  to  accept  for 
their  account  drafts,  with  documents  attached,  from  exporting 
merchants.  Upon  maturity  the  American  bank  has  to  look  to  its 
foreign  bank  correspondent  for  cover,  and  has  no  further  recourse 
on  the  exporter. 

Still  another  form  of  financing  foreign  shipments  is  the 
del  credere,  which  is  frequently  used  abroad.  It  is  a  guarantee 
undertaken  by  the  bank  that  the  buyer  will  discharge  himself  of 
his  obligation;  in  other  words,  it  is  a  guarantee  that  the  foreign 
buyer  will  pay  for  the  goods  in  question  at  the  appointed  time.  It 
does  not  tie  up  any  money  of  the  bank  direct,  and  it  is  left  to 
the  exporter  to  finance  the  shipment  himself.  Such  bank  guar- 

175 


Fourth  Session — Tuesday  Morning 


antee  will  facilitate  greatly  the  obtaining  of  credits  by  the  ex- 
porter. 

Such  are  the  principal  methods  by  which  bankers  are  able  to 
foster  the  development  of  international  trade  and  commerce. 

The  banks,  however,  can  only  assist,  can  only  do  their  share 
of  the  business.  The  merchants,  manufacturers  and  shippers 
must  do  the  larger  part,  and  the  friendly  international  cooperation 
of  all  parties  concerned  can  alone  obtain  the  great  results  we  all 
are  striving  for. 


THE  CHAIRMAN:  Gentlemen,  you  have  now  listened  to  this 
very  excellent  address.  Following  that  come  the  five-minute 
discussions.  It  has  been  thought  well  that  I  should  repeat  the 
particular  instructions  concerning  those  discussions.  They  are 
found  on  the  first  page  of  the  program,  and  are  intended  for 
harmonious  purposes.  We  will  omit  the  first  paragraph,  which 
is  so  general,  and  also  the  second,  and  go  on  to  the  subject 
headed  "The  War,"  which  says : 

"It  will  not  be  permitted  to  introduce  or  discuss  matters 
affecting  the  attitude  or  policies  of  governments  in  connection 
with  the  great  conflict  now  waging  in  Europe. 

"No  resolutions  will  be  accepted,  but  recommendations  may 
be  handed  to  the  secretary  for  submission,  without  reading,  to 
a  committee  on  recommendations." 

That  committee,  you  will  observe,  I  had  the  pleasure  of 
naming  at  the  opening  of  the  meeting. 

"Any  delegate  desiring  to  submit  remarks  or  opinions  to  be 
read  to  the  Conference  by  the  secretary  is  requested  to  submit 
them  in  typewritten  form,  in  duplicate,  with  the  understanding 
that  they  can  only  be  read  if  the  time  allotted  to  those  who  are 
to  deliver  their  remarks  orally  is  not  exhausted." 

The  paper  which  you  have  just  heard  is  now  under  dis- 
cussion, gentlemen,  under  the  five-minute  rule.  We  shall  be 
glad  to  hear  from  some  of  our  members,  visitors  and  others  on 
this  subject. 

Gentlemen,  we  should  like  to  hear  from  someone.  We  want 
to  keep  the  ball  rolling,  and  we  think  the  grounds  are  sufficiently 
improved  for  that  purpose. 

MR.  W.  B.  FLEMING  (of  the  Department  of  State)  :  I  rise 
not  to  give  any  information  but  to  ask  for  some  information. 

I  realize  very  fully  the  necessity  for  establishing  credit,  be- 

176 


Credits  Against  Imports  and  Exports — Discussion 

cause  our  foreign  trade  will  go  with  credits  as  much  if  not  more 
than  with  the  flag. 

What  I  would  like  to  have  some  gentleman  who  is  thoroughly 
familiar  with  the  subject  enlighten  me  upon  is  this:  Our  for- 
eign trade  in  comparison  with  our  domestic  trade  is  small.  I 
will  not  undertake  to  give  the  proportion,  but  perhaps  some  gen- 
tlemen here  would  be  able  to  say  that  ninety  or  ninety-five  per 
cent,  of  the  trade  of  the  United  States  is  internal  and  domestic. 

The  trade  between  these  States  of  ours  and  these  cities  of 
ours  is,  of  course,  immense,  and  in  comparison  with  it  even  our 
bounding  foreign  trade  is  small. 

That  does  not  mean  that  we  must  not  continue  to  expand 
our  foreign  trade.  I  am  more  interested,  myself,  by  reason  of 
my  connection  with  the  government,  in  the  expansion  of  foreign 
trade  than  I  am  with  the  expansion  of  domestic  trade. 

Of  course  I  am  altogether  concerned  with  foreign  trade  so 
far  as  my  official  relations  with  the  government  are  concerned. 

Therefore,  I  am  delighted  to  see  the  great  interest  that  is 
manifested  not  only  here  but  throughout  the  commercial  world  in 
the  extension  of  our  credits  abroad  and  of  our  business  abroad. 
But,  gentlemen,  while  we  are  considering  the  question  of  credits 
abroad  we  must  not  forget  the  question  of  credits  at  home  to 
take  care  of  this  ninety  or  ninety-five  per  cent,  of  the  great  busi- 
ness of  this  great  people,  a  business  which  is  so  great  that  it  is 
almost  past  comprehension;  because,  with  less  than  one-fifteenth 
of  the  population  of  the  world,  we  do  more  than  one-third  of 
the  business  of  all  of  the  world,  ourselves  included. 

What  a  tribute  that  is  to  the  business  men  who  are  here 
and  the  business  men  throughout  the  United  States.  Of  course, 
it  is  not  our  function  here  to  discuss  the  subject  I  am  suggesting, 
and  I  only  put  it  in  parenthetically  to  see  if  it  be  worth  while, 
either  here  and  now,  or  at  some  future  time  in  some  future  place, 
to  see  to  it  and  raise  the  question,  with  a  view  of  seeing  to  it, 
that  in  our  great  efforts  to  extend  our  trade  abroad  we  do  not 
deplete  the  veins  and  the  arteries  by  which  credit  circulates  at 
home.  (Applause.) 

MR.  JOHNSTON  (of  the  Louisville  Board  of  Trade)  : 

I  would  like  to  ask  Mr.  Seebeck  in  reference  to  the  guaran- 
teed credit  he  spoke  of,  what  is  the  nature  of  the  obligation  of 
the  contracting  parties  that  enter  into  that  guaranteed  credit? 

MR.  SEEBECK:  The  last  point  I  referred  to? 

MR.  JOHNSTON  :  Yes. 

177 


Fourth  Session — Tuesday  Morning 


MR.  SEEBECK:  It  is  usually  the  following:  The  foreign 
bank  giving  credit  or  having  banking  connections  with  the  im- 
porters of  the  merchandise  undertakes  to  guarantee,  on  behalf 
of  the  importer  of  the  merchandise,  that  payment  will  be  made 
under  certain  conditions,  upon  arrival  of  the  merchandise,  against 
such  and  such  documents,  or  upon  maturity  of  the  draft,  and 
usually  guarantees  this  to  another  banking  connection,  their  cor- 
respondent in  the  country  where  the  exporter  lives.  This  bank 
then  passes  the  guaranty  on  to  the  exporter,  and  the  exporter 
has  now  much  greater  facility  in  obtaining  any  credit  on  such  a 
guaranty  that  his  merchandise  will  be  paid  for.  It  is  not  actually 
giving  any  credit — it  is  just  guaranteeing  the  performance, 
nothing  else. 

MR.  JOHNSTON:  May  I  ask,  is  that  done  on  a  commission 
basis  ? 

MR.  SEEBECK  :  It  is  done  on  a  commission  basis.  The  bank 
naturally  requires  a  commission  for  giving  this  guaranty  from 
the  firm  for  whom  it  gives  it. 

MR.  JOHNSTON  :  The  firm  executes  its  obligation  to  the  bank 
as  it  gives  the  guaranty? 

MR.  SEEBECK:  Yes. 

MR.  JOHNSTON  :  Thank  you. 

MR.  SELDEN  :  I  would  like  to  ask  what  becomes  of  the  bank 
guaranty;  what  is  the  position  of  the  bank  guaranty  in  case  the 
obligation  is  not  met  at  maturity;  what  is  the  nature  of  the 
guaranty  and  what  does  it  amount  to? 

MR.  SEEBECK:  In  case  the  importer  should  not  comply  with 
his  obligation  the  exporter  would  have  recourse  to  the  bank 
which  had  guaranteed  it.  The  bank  of  the  importer  will  usually 
guarantee  it  to  another  bank  in  the  country  of  the  exporter,  and 
the  exporter  will  see  his  domestic  bank  in  case  the  merchandise 
should  not  be  paid  for,  and  that  domestic  bank,  liable  to  him  on 
its  part,  will  have  recourse  again  on  the  bank  that  originally  gave 
the  guaranty;  they  have  to  hold  him  harmless  if  the  buyer  has 
not  met  his  obligation. 

•   THE  CHAIRMAN  :  Are  there  any  other  questions  ? 

MR.  PEPPER  (of  Chicago)  :  In  regard  to  that  guaranty,  would 
that  be  as  safe  a  basis  as  a  letter  of  credit?  For  example, 
the  Rio  de  Janeiro  exporters  of  coffee  expect  people  in  this 
country  to  furnish  a  letter  of  credit.  The  manufacturers  of 
this  country  are  trying  to  get  the  people  down  there  to  work  it 
on  the  same  basis.  If  the  people  in  South  America  are  put  on 

178 


Credits  Against  Imports  and  Exports — Discussion 

the  basis  of  the  del  credere  guaranty,  would  that  be  as  safe  as 
the  letter  of  credit,  and  would  it  be  feasible? 

MR.  SEEBECK  :  It  is  a  question  whether  it  is  agreeable  to  the 
exporter  in  South  America.  If  it  is  agreeable  to  him,  it  is  all 
right. 

MR.  PEPPER  :  How  many  do  it  ? 

MR.  SEEBECK  :  Of  course,  he  will  want,  probably,  a  guaranty 
by  one  of  his  own  banks  in  his  country,  because  he  wants  to 
know  on  which  guaranty  to  rely.  It  will  not  always  be  agreeable 
to  him  if  he  gets  a  guaranty  from  a  foreign  bank. 

MR.  PEPPER  :  Can  he  get  that  guaranty  ? 

MR.  SEEBECK  :  If  the  American  banker  gives  this  guaranty  to 
the  southern  bank  and  the  southern  bank  passes  the  guaranty  on 
to  the  exporter  of  coffee,  it  no  doubt  would  be  agreeable  to  him, 
it  certainly  protects  him. 

MR.  PEPPER:  But  on  the  basis  of  a  practical  proposition, 
in  place  of  a  letter  of  credit,  if  that  could  be  worked,  it  would 
be  more  feasible  than  a  letter  of  credit,  because  it  would  not 
entail  the  feeling  that  they  would  have  to  pay  the  money  right 
away,  because  the  importer  in  the  foreign  market  would  be 
known  to  the  bank  over  there,  and  they  would  have  sufficient 
confidence  in  the  importer  to  extend  him  that  amount  of  credit, 
because  he  no  doubt  has  regular  transactions  in  the  foreign  mar- 
ket. If  the  bank  thinks  enough  of  him  to  guarantee  the  pay- 
ment to  the  American  manufacturers  in  this  country,  they  would 
no  doubt  be  willing  to  do  it  on  that  basis,  rather  than  another, 
because  they  can  be  sure  of  their  money  and  it  would  not  ne- 
cessitate a  letter  of  credit. 

How  much  business  has  been  done  on  that  basis  in  South 
America,  if  any? 

MR.  SEEBECK:  There  is  some  business  being  done  with 
South  America  every  year.  There  has  been  done  a  good  deal  of 
business  by  the  German  exporters  and  importers  and  by  the 
Russians  on  that  basis  of  the  guaranty. 

It  is  a  question — if  American  exporters  want  to  be  financed 
besides  just  receiving  that  guaranty,  the  guaranty  does  not  finance 
them.  It  just  assures  them  of  the  payment  for  their  merchandise 
in  due  course.  It  does  not  give  them  any  financial  assistance. 

MR.  PEPPER  :  In  that  connection,  may  I  ask  another  question  ? 
As  I  understand  it  in  the  new  Federal  Reserve  Bank  Act  facili- 
ties are  provided  to  such  an  extent  that  an  American  manu- 
facturer can  take  his  paper,  a  ninety  days'  sight  draft  on  a  for- 

179 


Fourttif  Session —  Tuesday  Morning 


eign  customer,  for  example,  and  discount  it  in  his  own  bank  and 
get  credit  for  it ;  but  he  must  ultimately  take  the  responsibility  of 
that  draft  being  paid  by  the  customer  abroad  or  it  will  be 
charged  back  to  him  by  the  bank  in  his  own  country. 

MR.  SEEBECK:  Every  drawer  does  that.  If  I  buy  a  draft 
from  somebody  and  the  draft  is  not  paid,  I  have  recourse  on  the 
drawer. 

MR.  PEPPER:  In  that  connection  the  del  credere  guaranty 
would  be  a  further  assurance  to  the  American  exporter  in  this 
country  that  he  would  get  his  money. 

MR.  SEEBECK:  Absolutely,  and  also  to  the  bank  to  discount 
the  draft.  The  bank  would  discount  the  draft  much  preferably 
if  it  has  been  guaranteed  by  a  bank. 

MR.  PEPPER  :  Could  it  be  done,  for  example,  in  this  instance : 
Take  the  American  manufacturer  in  this  country  who  desires  to 
extend  his  credit,  but,  in  view  of  the  present  conditions,  does  not 
think  it  desirable  to  take  any  great  risk.  He  desires  to  work  on 
this  basis,  and  says:  "We  know  you  are  not  familiar  with  the 
letters  of  credit  as  we  are  here.  We  are  willing  to  work  on  the 
del  credere  proposition."  Do  you  personally  believe  you  could 
get  a  foreign  importer  down  in  South  America,  or  in  Australia, 
to  accept  a  proposition  like  that  instead  of  a  letter  of  credit, 
and  not  insist  upon  our  giving  any  credit  to  those  people  without 
a  proper  guarantee?  In  your  experience  do  you  think  so? 

MR.  SEEBECK  :  I  know  that  it  is  being  done. 

MR.  PEPPER:  To  any  extent? 

MR.  SEEBECK:  It  has  been  done  between  London  and  South 
America  to  quite  a  large  extent. 

MR.  PEPPER:  It  is  not  being  done  in  this  country  direct? 

MR.  SEEBECK  :  It  is  being  started. 

MR.  PEPPER:  You  think,  then,  it  could  be  developed  and  is 
a  feasible  proposition? 

MR.  SEEBECK  :  Certainly  it  could  be  developed,  absolutely. 

MR.  PEPPER:  Thank  you. 

THE  CHAIRMAN  :  Are  there  any  other  questions  to  be  asked  ? 
If  not  we  will  proceed  to  the  next  subject:  "The  Making  of  an 
Export  Policy,"  by  Dr.  E.  E.  Pratt,  Chief  of  the  Bureau  of 
Foreign  and  Domestic  Commerce,  who  is  too  well  known,  es- 
pecially in  an  audience  of  gentlemen  interested  in  foreign  trade, 
to  need  any  introduction  by  me.  You  all  know  how  much  in- 
telligence and  energy  he  has  devoted  to  the  development  of  this 
important  Government  Bureau  of  the  Department  of  Commerce, 

180 


The  Making  of  an  Export  Policy 


and  Dr.  Pratt  has  very  kindly  consented  to  prepare  a  paper  for 
this  meeting,  the  title  of  which,  as  announced,  is  "The  Making 
of  an  Export  Policy." 

Gentlemen,  I  have  great  pleasure  in  introducing  to  you  Dr. 
Pratt. 

The  Making  of  an  Export  Policy 

Dr.  EDWARD  EWING  PRATT, 

Chief,  Bureau  of  Foreign  and  Domestic  Commerce,  Washington,  D.  C. 

A.     The  Present  Export  Situation 

The  enthusiasm  for  foreign  trade  which  followed  the  out- 
break of  the  European  war  did  not  seem,  at  that  time,  to  be 
entirely  justified.  The  actual  results,  however,  in  the  extension 
of  our  foreign  trade  have  been  considerable  and,  in  some  ways, 
quite  remarkable.  Not  all  the  roseate  hopes  which  were  asso- 
ciated with  the  possibilities  of  developing  export  markets  have 
been  realized.  The  mere  statement,  however,  that  the  European 
war  has  furnished  an  opportunity  for  the  development  of  Amer- 
ican foreign  trade  has  been  justified,  temporarily  at  least.  This 
opportunity  was  not  so  much  the  opportunity  to  sell  goods  im- 
mediately in  the  neutral  markets  of  the  world  as  it  is  the 
opportunity  to  build  up  trade  connections  for  future  business.  In 
the  first  few  months  after  the  outbreak  of  the  European  war 
our  trade  greatly  diminished,  not  only  with  the  belligerent  coun- 
tries but  with  the  neutral  countries,  countries  not  directly  affected 
by  the  war.  Within  the  last  few  months,  however,  a  change  has 
taken  place  and  our  exports  to  neutral  markets  in  parts  of  the 
world  far  distant  from  the  actual  fighting  have  considerably 
increased. 

The  growth  of  our  export  trade  in  certain  parts  of  the  world 
is  worth  a  little  very  serious  consideration.  If  we  compare  our 
foreign  trade  in  1913  with  our  trade  in  1915  we  find  some  very 
interesting  results.  Supposing  we  compare  the  four  months,  June, 
July,  August  and  September,  1913,  with  the  same  four  months 
in  1915:  We  find  that  during  that  period  our  trade  with  Canada 
has  decreased  about  9  per  cent. ;  our  trade  with  Central  America 
has  remained  practically  stationary ;  our  trade  with  South  Africa 
has  increased  12  per  cent. ;  our  trade  with  South  America  has  in- 
creased 22  per  cent;  our  trade  with  Asia  has  increased  51  per 
cent.;  and  perhaps  most  remarkable  of  all,  our  trade  with  Aus- 
tralia has  increased  77  per  cent.  These  facts  demonstrate  beyond 

181 


Fourth  Session — Tuesday  Morning 


question  that  our  trade  with  countries  unaffected  directly  by  the 
war,  has  increased  temporarily. 

EXPORTS  FROM  THE  UNITED  STATES  TO  THE  SPECIFIED  COUNTRIES 

During  the  four  months  of  June  to  September,  inclusive,  1915,  compared  with 

the  same  period  in  1913,  showing  per  cent,  increase. 

Four  Months  Ending  September  Per  Cent. 

Countries  and  Grand  Divisions  1913  1915  Increase 

South  America $46,663,570  $56,705,248  21 . 5 

Central  American  States 13,398,119  13,335,970  *0 . 5 

Canada 138,013,720  125,729,855  *8.9 

British  South  Africa 5,869,336  6,552,940  11 . 6 

Asia 30,950,442  46,722,322  51.0 

Australia 13,718,796  24,237,616  76.7 

*  Decrease. 

EXPORTS  FROM  THE  UNITED  STATES  TO  THE  SPECIFIED  COUNTRIES 

During  the  four  months  from  June  to  September,  inclusive,  1915,  compared 

with  the  same  periods  in  1913  and  1914 

South  America:  1913  1914  1915 

June $10,656,322  $7,573,487  $13,744,090 

July 11,682,492  7,828,388  12,572,193 

August 12,280,952  5,312,457  13,450,247 

September 12,043,804  8,290,184  16,938,718 

Total $46,663,570  $29,004,516  $56,705,248 

Central  American  States: 

June $3,210,829  $3,521,387  $3,212,455 

July 3,265,343  2,724,165  3,651,007 

August 3,669,533  2,807,641  2,942,613 

September 3,252,414  4,026,641  3,529,895 

Total $13,398,119  $13,079,834  $13,335,970 

Canada: 

June $37,618,485  $28,231,548  $29,561,783 

July 34,218,539  31,607,048  29,497,982 

August 35,442,709  33,495,829  34,766,904 

September 30,733,987  25,946,675  31,903,186 

Total $138,013,720  $119,281,100  $125,729,855 

British  South  Africa: 

June $1,372,030      $1,382,533      $1,591,081 

July 1,120,932  945,719        1,512,798 

August 1,628,186  681,401        2,018,593 

September 1,748,188        1,267,591        1,430,468 

Total $5,869,336  $4,277,244  $6,552,940 

Asia: 

June $8,682,892  $7,252,349  $13,648,403 

July 8,099,701  6,178,134  12,853,678 

August 6,308,082  3,789,548  10,268,041 

September 7,859,767  7,043,793  9,952,200 

Total $30,950,442  $24,263,824  $46,722,322 

Australia: 

June $3,592,160  $4,034,589  $5,658,213 

July 2,815,690  3,581,442  7,458,090 

August 3,875,282  1,825,453  5,285,223 

September 3,435,664  4,428,681  5,836,090 

Total $13,718,796    $13,870,165    $24,237,616 

182 


The  Making  of  an  Rxport  Policy 


The  next  important  question  for  consideration  is  whether  or 
not  we  shall  be  able  to  hold  this  trade.  Some  people  are  of  the 
opinion  that  following  the  war  the  European  countries  will  flood, 
not  only  our  own  market  but  the  other  markets  of  the  world,  with 
cheaply  made,  low-priced  manufactured  articles.  The  predomi- 
nance of  opinion,  however,  seems  to  be,  and  I  must  confess  that 
the  facts  and  logic  of  the  situation  seem  to  urge  this  view,  that 
the  costs  of  production  and  consequently  prices  will  be  much 
enhanced  in  European  countries  and  that,  in  spite  of  the  best 
organized  and  the  most  vigorous  efforts  on  the  part  of  our  Euro- 
pean competitors,  they  will  not  be  able  to  compete  in  our  own 
markets  and  in  other  markets  of  the  world  on  as  favorable  terms 
as  they  have  been  able  to  compete  heretofore.  I  believe  and  I 
find  that  most  of  those  who  are  professionally  engaged  in  foreign 
trade  hold  a  similar  opinion,  that  we  shall  be  able  to  retain  the 
major  part  of  the  markets  which  we  gain  during  the  present  dis- 
turbed world  conditions. 

B.     The  Available  Markets 

Much  emphasis  in  public  prints  and  public  speeches  has  been 
placed  on  the  possible  markets  for  our  products  in  Latin-America. 
Wherever  the  subject  of  foreign  trade  is  discussed,  our  trade 
with  Latin-America  is  usually  given  the  position  of  greatest  im- 
portance. Personally,  I  doubt  if  the  largest  opportunities  for  the 
American  manufacturer  and  exporter  are  to  be  found  in  Latin- 
America.  I  believe  that  there  are  other  markets  of  even  greater 
importance  than  the  markets  of  Latin-America,  although  we  must 
not  forget  that  the  continent  to  the  south  of  us  is  still  largely 
undeveloped  and  has  great  potentialities. 

The  population  of  Latin- America  all  told,  including  Mexico 
and  the  West  Indies,  amounts  to  perhaps  83,000,000.  On  the 
other  hand,  we  must  not  forget  that  there  are  tremendous  mar- 
kets with  great  populations  in  other  parts  of  the  world — South 
Africa  with  a  population  of  5,973,000;  Australia  with  a  popula- 
tion of  5,044,000;  India  with  a  population  of  315,133,000;  the 
East  Indies  with  a  population  of  37,717,000;  Japan  with  a  popu- 
lation of  53,697,000 ;  China  with  a  population  of  336,042,000 ;  and 
last,  but  not  least  important,  Russia  with  a  population  of  167,- 
920,000.  There  is  no  way  of  accurately  determining  the  pur- 
chasing power  of  these  various  portions  of  the  world.  A  rough 
estimate,  perhaps,  of  their  purchasing  power,  compared  with  the 
purchasing  power  of  the  people  of  the  United  States  will  be  in- 
teresting, if  not  accurate.  On  that  basis  the  total  purchasing 

183 


Fourth  Session — Tuesday  Morning 


power  of  Latin-America  might  be  estimated  to  be  equal  to  the 
purchasing  power  of  about  13,000,000  Americans,  residents  of  the 
United  States. 

To  the  average  manufacturer  the  mere  statement  that  the  en- 
tire population  of  a  foreign  country  is  this,  or  that,  means  very 
little.  The  statement  that  China  has  a  total  population  of  336,- 
000,000  or  that  British  India  has  a  total  population  of  315,000,000 
does  not  give  the  American  manufacturer  any  definite  idea  as  to 
the  possible  market  for  his  merchandise.  Each  manufacturer 
knows  that  he  can  count  only  on  certain  limited  classes  of  the 
population  as  possible  purchasers  of  his  merchandise.  He  is  ac- 
cordingly interested  in  finding  the  numbers  of  the  population 
which  fall  in  each  of  those  classes.  Probably  a  statement  of  the 
urban  population  of  a  foreign  country  is  of  more  utility  to  the 
average  American  manufacturer  than  is  a  statement  of  the  total 
population.  For  the  majority  of  articles  the  manufacturer  looks 
to  an  urban  and  not  to  a  rural  population  for  his  market.  Ac- 
cordingly, I  have  taken  the  estimates  of  the  urban  population  in 
South  America,  Central  America,  and  some  of  the  other  important 
markets,  and  have  tabulated  them,  with  the  idea  that  to  the  average 
American  manufacturer  these  figures  give  a  better  indication 
of  the  extent  of  the  purchasing  market  than  any  other  single  class 
of  population  figures.  The  figures  here  given  for  urban  population 
are  only  approximate.  In  many  of  the  countries  covered  there  are 
no  reliable  official  data  on  this  subject.  For  the  most  part  the 
figures  for  urban  (or  purchasing  population)  here  given  are  those 
found  in  the  "Statesman's  Yearbook"  and  in  Otto  Huebner's  "Geo- 
graphische-Statistische-Tabellen"  and  certain  other  sources  of 
a  similar  character.  As  I  have  said,  these  are  only  rough  figures 
but  I  believe  they  are  sufficiently  interesting  to  indicate  possible 
lines  for  painstaking  statistical  research. 

STATISTICS  OF  POPULATION  AND  IMPORTS  FOR  CERTAIN  IMPORTANT 
FOREIGN  MARKETS 


Countries 
South  America: 
Argentina.  .  .  . 

Total 
Population 
8,700  000 

Purchasing 
Population 
2,560,000 
214,000 
2,953,000 
986,000 
545,000 
305,000 
201,000 
331,000 
442,000 
343,000 

Total           Imports  from 
Imports        United  States 
$406,805,000      $59,862,000 
21,358,000          1,900,000 
326,865,000        51,358,000 
120,274,000        20,089,000 
26,987,000          7,630,000 
10,653,000          2,764,000 
8,120,000             488,000 
29,631,000          8,542,000 
50,666,000          6,300,000 
17,005,000         6,158,000 

Bolivia  

2,521,000 

24,308  000 

Chile 

3  464  000 

Columbia.  .  .  . 

5,473,000 

1,500,000 

800,000 

Peru  

5,800,000 

1,226,000 

Venezuela.  .  .  . 

2,756,000 

Total. 


56,548,000      8,880,000       $1,018,364,000    $165,091,000 
184 


The  Making  of  an  Export  Policy 


Central  America: 
Costa  Rica  .... 
Guatemala  .... 

411,000 
2,119,000 
589,000 

69,000 
204,000 
107,000 

$8,685,000 
10,062,000 
5,133  000 

$4,468,000 
5,053,000 
3464000 

Nicaragua  
Panama. 

690,000 
387  000 

240,000 
81  000 

5,768,000 
9  872  000 

3,244,000 
5  413  000 

Salvador 

1  210  000 

198000 

6  167  000 

2  490  000 

Total 5,406,000 

Latin  America,  Other: 

Cuba 2,474,000 

Haiti 2,500,000 

Mexico 15,446,000 

Santo  Domingo.  725,000 


899,000 

1,026,000 

165,000 

1,693,000 

72,000 


$45,687,000      $24,132,000 


$133,975,000 

10,935,000 

93,020,000 

9,272,000 


$71,380,000 

6,499,000 

44,510,000 

5,769,000 


Total 21,145,000      2,956,000          $247,202,000    $128,158,000 

China.  .  336,042,000 

Japan  (b) 53,697,000 

British  India 315,133,000 

Australia 5,044,000 

British  S.  Africa. .         5,973,000 

Russia 167,920,000 

Turkey 20,600,000 

New  Zealand 1,152,000 

Egypt 11,287,000 

(a)  Estimated  population  of  45  treaty  ports  in  1912. 
population  in  China  in  1912  was  145,000. 

(b)  Total  population  1914;  purchasing  population  1908. 

(c)  White  population  in  cities.  Total  population  of  Europeans,  1,276,000. 


7,774,300(a) 
8,300,000 
29,748,000 
2,417,000 
331,000(c) 
24,157,000 
3,507,000 
425,000 
1,540,000 

$427,406,000 
363,257,000 
594,521,000 
388,102,000 
187,489,000 
603,463,000 
193,024,000 
108,466,000 
137,738,000 

$25,826,000 
60,959,000 
15,544,000 
46,342,000 
17,851,000 
45,026,000 
5,280,000 
10,259,000 
2,596,000 

The  total  foreign 


There  is  one  market  especially  which  is  worth  the  most 
serious  attention  on  the  part  of  every  manufacturer  and  exporter. 
I  refer  to  Russia.  The  imports  into  Russia,  during  the  last  few 
years,  averaged  about  $500,000,000,  roughly  one-half  of  these  im- 
ports have  come  from  Germany.  Not  all  of  those  products  have 
been  of  German  origin  for  the  Germans  have,  in  many  cases, 
acted  as  the  middleman  for  the  Russian  trade.  Here  is  a  great 
trade  open  at  least  on  fair  and  equal  basis  to  the  American  man- 
ufacturer and  exporter.  We  must  not  forget  that  Russia  is  a 
country  of  great  natural  resources,  a  country  which  is  in  large 
part  undeveloped.  Her  railroads,  her  ports,  her  public  utilities 
are  still  in  large  part  to  be  built.  Her  mines  and  natural  re- 
sources are  in  large  part  still  to  be  developed.  And  let  me  point 
out  that  Russia,  during  the  next  fifty  years,  will  go  through  a 
period  of  development  very  much  like  that  through  which  the 
United  States  has  been  going  in  the  last  fifty  years.  Our  man- 
ufacturers and  exporters  are  particularly  well  qualified  to  meet 
the  urgent  demands  of  the  Russian  market. 

C.     Unbusinesslike  Methods  in  Foreign  Trade 

It  is  now  your  business,  as  manufacturers,  to  embark  on  the 
process  of  actually  getting  foreign  business.  Let  me  urge  first 

185 


FourthJSession — Tuesday  Morning 


and  at  all  times  that  we  be  businesslike  in  our  methods  of  getting 
foreign  trade.  Let  me  urge  that  we  use  the  same  sane,  common 
sense  business  methods  which  have  been  so  successful  in  domestic 
trade.  Let  me  emphasize  the  proposition  that  there  is  no  essential 
difference  between  foreign  trade  and  domestic  trade. 

The  fundamental  business  methods  which  have  been  success- 
ful in  domestic  business  will  be  successful  in  foreign  business. 
The  differences  which  sometimes  monopolize  our  attention  are 
in  large  part  surface  differences  or  temporary  obstacles  that  are 
easily  overcome.  As  a  matter  of  fact,  the  very  problems  which 
I  want  to  raise  with  you  here  today,  are  all  of  them  problems 
which  you  have  settled  with  reference  to  your  domestic  business. 
The  differences  which  sometimes  monopolize  our  attention  are 
from  a  different  angle.  To  these  decisions  that  you  must  make, 
apply  your  usual  and  ordinary  business  tests.  They  are  quite 
ample. 

1.     The  Decision  to  Go  into  Foreign  Trade 

There  is  no  more  important  decision  which  a  manufacturing 
concern  can  make  than  the  decision  as  to  whether  or  not  the 
concern  will  engage  in  foreign  trade.  It  is  a  decision  which  far 
outranks  in  importance  the  decision  to  acquire  a  rival  plant  or  to 
build  a  new  plant,  or  to  enlarge  capitalization.  It  is  far  more 
important  than  the  decision  to  take  up  the  manufacture  of  a  new 
line  of  goods,  or  to  put  a  new  product  on  the  market.  The  de- 
cision as  to  whether  or  not  you,  as  a  manufacturer,  are  going 
into  the  foreign  market  is  not  merely  the  decision  as  to  whether 
or  not  you  are  going  to  sell  a  few  goods  in  foreign  markets  now 
and  then.  The  selling  of  an  occasional  order  in  a  foreign  market 
is  not  exporting.  It  certainly  is  not  foreign  trade. 

The  decision  to  be  made  about  export  trade  is  the  decision 
to  go  in  permanently  or  to  stay  out  permanently.  The  decision 
to  go  in  is  one  which  involves  the  setting  aside  of  a  large  amount 
of  capital  for  the  specific  purpose  of  developing  a  foreign  busi- 
ness. It  is  a  decision  that  means  the  inauguration  of  a  new 
department  in  your  business,  a  department  of  which  not  one  man 
in  a  hundred  or  perhaps  more  accurately  not  one  man  in  a 
thousand  is  qualified  to  take  charge.  It  is  a  decision  that  com- 
prehends a  vast  complexity  of  laws,  regulations,  languages,  rates, 
trade  customs  and  conditions  which  are  different  from  those  with 
which  any  part  of  your  business  has  had  to  deal  heretofore. 

The  manufacturer  must  determine,  on  the  basis  of  careful 
study,  whether  he  wants  foreign  sales,  whether  he  needs  increased 

186 


The  Making  of  an  Export  Policy 


output,  or  whether  he  can  get  along  equally  well  without  markets 
beyond  our  boundaries. 

But,  perhaps  even  more  important  than  the  details  which 
must  be  considered  and  perhaps  even  more  important  than  the 
money  which  must  be  invested  is  the  brains  which  must  direct  the 
foreign  trade  or  the  export  department.  A  decision  which  in- 
volves so  much,  which  means  the  investment  of  such  a  consider- 
able amount  of  money,  must  be  made  only  by  the  highest  direct- 
ing body  in  a  business  concern.  It  must  be  made  with  the  full 
knowledge  that  if  the  business  is  to  be  a  success  it  is  the  most 
important  decision  which  the  concern  can  make. 

II.     Deciding  on  an  Executive  Policy 

A  decision  having  been  reached  to  embark  in  export  trade, 
the  next  problem  which  comes  up  for  decision  is  that  which  re- 
lates to  the  executive  direction  of  the  export  portion  of  the  busi- 
ness and  to  the  selection  of  possible  markets. 

The  export  business  requires  perhaps  a  greater  amount  of 
executive  oversight  than  any  other  portion  of  your  business.  If 
you  decide  to  embark  in  the  export  trade,  and  if  you  decide  to 
establish  a  department  for  handling  the  business,  that  department 
should  be  put  in  charge  of  no  less  an  officer  than  a  vice-president. 
If  the  size  of  your  establishment  does  not  warrant  the  organiza- 
tion of  a  separate  department  for  the  export  trade,  the  export 
business  should  then  have  the  personal  attention  of  the  executive 
head  of  your  business. 

The  first  of  your  executive  problems  will  undoubtedly  be 
the  selection  of  your  export  manager,  or  the  head  of  your  ex- 
port department.  In  general  you  have  two  possible  choices:  a 
man  from  outside  of  your  business  who  knows  exporting;  or  a 
man  from  the  inside  who  knows  your  business.  Fortunate  you 
are  if  you  have  a  man  with  a  knowledge  of  exporting  in  your 
organization,  because  the  first  lacks  knowledge  of  your  business, 
and  the  second  lacks  breadth  of  view. 

The  next  problem  that  will  come  up  for  executive  decision 
will  be  the  choice  of  territory.  This  is  not  a  decision  that  can 
be  made  by  one  who  is  unfamiliar  either  with  conditions  in  the 
world's  markets  or  with  your  products.  It  is  a  decision  for  the 
executive  head  of  your  business.  A  similar  decision  would  have 
to  be  made  if  you  were  to  extend  your  business  to  the  Pacific 
Coast,  or  to  New  England,  or  to  Canada,  which  is  often  con- 
sidered a  part  of  our  domestic  market.  It  is  not  to  be  expected 

187 


Fourth  Session — Tuesday  Morning 


that  flannel  underwear  can  be  sold  in  Egypt  or  that  heating  stoves 
will  find  a  ready  market  in  Java,  although  manufacturers  have 
tried  both.  The  nature  of  your  product  and  the  conditions  in 
foreign  markets  are  the  two  factors  that  determine  the  foreign 
markets  on  which  you  as  manufacturers  or  exporters  must  decide. 

The  selection  of  the  market  in  which  you  expect  to  expend 
your  very  best  efforts  is  of  primary  importance.  If  you  can  make 
that  decision  without  personal  investigation,  well  and  good;  if 
you  cannot,  then  go  and  see  for  yourself. 

I  cannot  refrain  at  this  point  from  paying  my  respects  to 
that  catch-phrase  which  has  been  hawked  from  one  foreign  trade 
orator  to  another,  that  American  manufacturers  do  not  manu- 
facture the  kinds  of  goods  which  are  wanted  in  foreign  coun- 
tries. As  that  statement  is  usually  made  it  is  open  to  serious 
misinterpretation,  because  it  states  a  half-truth  and  not  the  whole 
truth.  When  goods  are  sold  on  a  basis  of  taste,  the  manufac- 
turer must  meet  the  taste  of  the  foreign  buyers.  Among  such 
goods  might  be  included  certain  classes  of  food  and  clothing. 
But  when  goods  are  sold  on  the  basis  of  utility,  taste  does  not 
play  an  important  part.  In  this  case  the  goods  possessing  the 
most  utility,  irrespective  of  the  taste  of  the  population,  will  be 
the  goods  which  can  eventually  hold  the  market.  Then,  too, 
there  are  often  some  circumstances,  aside  from  taste  and  rela- 
tive utility,  which  determine  what  can  be  sold  in  a  given  place. 
When  the  physical  conditions  of  a  market  require  a  certain  type 
of  article,  of  course,  that  type  of  article  must  be  supplied.  But 
when  our  manufacturers  come  into  competition  with  an  inferior 
or  antiquated  article,  it  is  up  to  our  manufacturers  to  introduce 
the  superior  product  by  whatever  means  they  may  have  at  their 
disposal. 

For  example,  you  know  as  well  as  I  do,  that  plows  vary 
not  so  much  with  the  taste  of  the  plowman  as  with  the  character 
of  the  soil  in  which  the  plow  must  be  used  and  the  character  of 
the  animal  which  must  draw  the  plow.  Plows  of  different  types 
are  used  in  the  different  sections  of  the  United  States.  Similarly, 
plows  of  different  types  are  used  in  different  foreign  countries. 
The  manufacturer,  therefore,  must  find  out  the  soil  conditions 
and  must  export  to  a  certain  market  the  type  of  plow  which  the 
soil  conditions  there  require.  On  the  other  hand,  it  is  absurd 
to  urge  that  the  American  manufacturer  of  locks  should  attempt 
to  imitate  the  ancient  lock  which  is  still  in  use  in  South  America, 
with  a  key  so  long  that  it  must  be  folded  in  the  middle  in  order  to 

188 


The  Making  of  an  Export  Policy 


be  carried  in  the  pocket.  In  that  case  our  locks  are  superior 
and  it  is  the  duty  of  our  manufacturers  to  introduce  their  su- 
perior locks.  It  is  not  their  duty  to  ape  their  competitors  and 
they  will  not  permanently  secure  foreign  markets  by  merely 
imitating  an  inferior  and  antiquated  product. 

It  is  a  part  of  the  executive  policy,  therefore,  with  reference 
to  foreign  trade,  to  decide  those  general  and  preliminary  points 
before  embarking  on  a  serious  campaign  to  get  trade  in  any 
foreign  market. 

III.     Deciding  on  a  Selling  Policy 

The  manufacturer  who  has  decided  to  go  into  foreign  trade 
has  at  his  disposal  three  essentially  different  methods  of  doing 
business : 

First,  selling  direct;  second,  selling  through  a  manufac- 
turer's agent;  third,  selling  through  export  commission  houses. 

Under  direct  selling  I  include  the  direct  exploitation  of  for- 
eign markets  through  salesmen,  branches,  exclusive  dealers,  or 
through  the  mails. 

It  has  been  my  privilege  during  the  last  few  months  to  meet 
many  manufacturers  who  have  gone  in  for  foreign  trade  or  were 
seriously  looking  in  that  direction.  I  must  confess  my  surprise 
at  the  very  limited  knowledge  of  many  of  them,  and  at  the 
amount  of  misinformation  which  most  of  them  had  acquired.  I 
believe  that  I  can  best  place  before  you  the  points  that  I  wish  to 
raise  by  asking  some  pertinent  questions,  which  I  hope  you  will 
each  ask  yourself  and  apply  to  your  own  business  and  experience. 

Let  me  first  suppose  that  you  have  decided  to  go  into  the 
business  direct;  that  you  have  decided  to  eliminate  the  export 
commission  house  and  the  manufacturer's  agent.  There  are  some 
problems  in  this  connection  which  I  want  to  put  up  to  you  for 
decision.  Have  you  decided  this  after  carefully  investigating  the 
alternatives  that  are  open  to  you ;  after  carefully  investigating 
the  services  which  certain  professional  export  agencies  are 
prepared  to  render  you?  Or,  has  your  prejudice  against  the 
middleman  hastened  you  to  a  decision?  Have  you  decided  to 
establish  your  own  agencies,  or  to  send  salesmen,  or  to  do  your 
business  by  mail  ?  Have  you  decided  where  your  agencies  will  be 
located?  Have  you  decided  how  you  are  going  to  pick  the  man- 
agers of  these  agencies?  Do  you  think  a  native  of  the  country 
is  to  be  preferred  to  an  American?  Have  you  decided  as  to  the 
type  of  man  who  is  particularly  fitted  for  an  agency  in  a  given 

189 


Fourth  Session — Tuesday  Morning 


country?  Have  you  decided  to  back  up  your  agencies  with  a 
selling  force?  Have  you  decided  where  and  how  you  are  to 
obtain  your  salesmen?  Have  you  located  a  supply  of  salesmen 
speaking  the  language  of  the  countries  where  they  are  going? 
With  reference  to  China,  for  example,  have  you  considered  the 
bearing  of  the  compradore  system  on  your  sales  methods?  Have 
you  decided  to  send  salesmen  to  China  in  the  expectation  that 
they  will  be  able  to  do  business  with  the  retailer  or  even  the  large 
native  jobber?  Have  you  considered  the  necessity  of  making  a 
thorough  study  of  the  consular  regulations  of  foreign  countries? 
Have  you  considered  the  necessity  of  making  a  study  of  the 
tariffs  of  foreign  countries?  Have  you  found  a  man  who  is  fa- 
miliar with  foreign  tariffs  and  consular  regulations,  who  reads 
the  languages  of  these  various  countries,  and  who  can  take  the 
original  documents  with  all  their  official,  complicated  and  tech- 
nical terminology  and  translate  them  into  understandable  and 
usable  English?  Have  you  decided  to  collect  for  yourself  com- 
plete information  with  reference  to  shipping  routes,  rates  and 
documents  ?  Have  you  decided  to  select  salesmen  with  a  knowl- 
edge of  your  business,  or  have  you  decided  to  select  salesmen 
with  a  knowledge  of  the  language  of  the  countries  to  which  they 
are  going?  Have  you  worked  out  in  your  plant  or  in  your  busi- 
ness a  method  of  training  salesmen — because,  I  warn  you,  sales- 
men ready-made  for  foreign  trade  are  not  easily  to  be  found? 
Have  you  carefully  considered  whether  the  line  which  you  are 
manufacturing  is  a  simple  line  which  can  be  readily  handled  by 
unskilled  and  perhaps  untechnical  salesmen,  or  whether  your  line 
is  one  which  requires  skilled  attention  and  technical  knowledge? 
And  have  you  decided  as  to  whether  or  not  you  are  going  to 
supply  any  service?  If  your  product  is  a  mechanical  one,  have 
you  decided  whether  or  not  you  are  going  to  send  out  mechanical 
experts  and  attach  them  to  your  agencies?  Or,  do  you  expect 
to  have  them  traveling  in  the  countries  where  you  are  selling 
your  goods?  Of  course,  you  realize  that  service  is  an  important 
feature  in  selling.  Therefore,  have  you  considered  the  necessity 
of  having  a  complete  service  department  in  connection  with  each 
one  of  your  foreign  agencies?  Have  you  studied  the  patent 
laws  of  the  foreign  countries  where  you  expect  to  do  business? 
Are  you  prepared  to  go  to  the  trouble  of  registering  your  trade- 
marks in  foreign  countries,  and  are  you  fully  aware  of  the  many 
pitfalls  in  connection  with  the  patent  regulations  and  trademark 
laws  in  foreign  countries? 

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The  Making  of  an  Export  Policy 


I  might  go  on  with  my  questions  but  I  am  sure  that  those  of 
you  who  have  decided  to  do  your  export  business  direct  have 
already  considered  them,  and  that  your  export  managers  are 
already  walking  encyclopedias,  fairly  oozing  with  foreign  trade 
information. 

The  Export  Commission  House 

Let  us  now  suppose  that  you  have  decided  to  do  business 
through  a  commission  house.  My  questions,  however,  may  inter- 
est all  those  in  the  export  business. 

Have  you  chosen  your  commission  house?  Perhaps  even 
more  important,  have  you  decided  whether  you  are  going  to  do 
business  through  one  commission  house  or  through  several  com- 
mission houses?  Are  you  aware  that  many  commission  houses 
are  excellent,  many  are  good,  and  as  in  any  line  of  business,  some 
are  decidedly  indifferent?  Have  you  carefully  considered  the 
fact  that  some  commission  houses  do  a  large  business  in  one  part 
of  the  world  and  do  no  business  in  other  parts  of  the  world? 
Even  in  restricted  sections  of  the  world,  as  for  example  in  South 
America,  one  commission  house  may  do  a  very  large  business  in 
machinery  on  the  West  Coast  and  may  do  no  business  in  ma- 
chinery on  the  East  Coast;  while  on  the  other  hand,  another 
commission  house,  perhaps  located  around  the  corner,  may  be  do- 
ing a  very  large  business  in  machinery  on  the  East  Coast  and  no 
business  in  machinery  on  the  West  Coast.  Have  you,  therefore, 
made  a  careful  study  of  the  export  houses  with  a  view  to  deter- 
mining which  of  them  are  best  prepared  to  handle  your  particular 
goods  in  given  foreign  markets?  Then  again,  have  you  decided 
to  do  business  in  a  given  market  with  one  commission  house  only, 
or  are  you  going  to  establish  relations  with  several  commission 
houses  in  the  same  market  and  let  them  compete  for  your  busi- 
ness? Some  of  the  very  largest  exporters  in  the  United  States 
do  business  through  commission  houses,  and  in  certain  foreign 
markets  those  largest  exporters  maintain  their  own  offices  not 
so  much  for  the  purpose  of  making  sales  as  for  the  purpose  of 
helping  the  export  houses  to  make  the  sales  for  them.  Do  you 
clearly  understand  the  financial  strength  of  the  export  houses? 
Do  you  realize  that  in  many  parts  of  the  world  the  export  houses 
financially  back  many  of  the  most  important  enterprises  and  that 
one  export  house  may  be  backing  a  railroad  development;  that 
another  may  be  backing  some  sugar  plantation;  and  that  even  in 
the  same  market  different  export  houses  may  absolutely  hold  in 

191 


Fourth  Session — Tuesday  Morning 


the  hollow  of  their  hands  certain  very  large  and  important  sec- 
tions of  the  trade?  And  doesn't  that  mean  that  if  you  put  your 
business  in  the  hands  of  a  single  house  you  may  thereby  effect- 
ively close  the  door  to  certain  other  very  rich  markets  in  the 
same  territory?  Now  have  you  considered  all  of  these  points? 
Then,  having  chosen  your  commission  house  or  commission 
houses,  and  having  decided  on  your  policy  with  reference  to  the 
commission  houses,  are  you  going  to  let  the  export  house  go  it 
alone,  or  are  you  going  to  support  its  efforts?  Are  you  going 
to  advertise  in  the  market  with  the  idea  of  supporting  the  sales 
which  are  to  be  made  through  the  export  house?  And  here  is 
an  important  and  vital  question:  do  you  think  that  you  can  get 
real  sales  service  on  a  commission  of  2^2  per  cent.,  or  even  on  a 
commission  of  5  per  cent?  Do  you  think  that  any  organization 
can  give  you  in  any  market  real  sales  service  for  2^2  per  cent., 
or  5  per  cent  ?  What  is  your  sales  expense  in  the  United  States  ? 
Do  you  appreciate  the  fact  that  your  sales  expense  in  foreign  mar- 
kets is  likely  to  be  greater  than  at  home  ?  How  then  do  you  think 
that  you  can  get  the  kind  of  service  you  want  from  the  export  house 
doing  business  on  a  2^ -per  cent,  commission  in  a  foreign  market? 
You  can  scarcely  compare  the  results  obtained  with  those  ob- 
tained from  your  own  organization  in  the  domestic  market.  If 
you  think  that  the  commissions  are  not  adequate,  are  you  pre- 
pared to  give  a  larger  commission  to  an  export  house  for  exploit- 
ing your  goods  ?  Or  still  better,  are  you  prepared  to  send  a  dem- 
onstrator or  a  salesman  into  a  territory  to  support  the  activities 
of  the  export  house,  and  are  you  prepared  to  back  him  up  by  an 
advertising  campaign  and  by  a  circularizing  campaign?  Are  you 
willing  to  give  the  export  house  an  advertising  appropriation? 
Finally,  is  it  your  intention  somewhere  way  in  the  back  of  your 
head  or  down  in  your  heart  to  let  the  professional  export  man 
build  up  the  business  for  you,  to  break  the  ground,  to  blaze  the 
trail,  and  then  do  you  expect  after  a  profitable  business  has  been 
developed,  to  take  the  business  away  from  him?  Do  you  realize 
that  with  the  exception  of  Europe,  the  major  part  of  our  export 
business  is  handled  through  professional  export  houses?  Do 
you  realize  that  up  to  the  present  time  they  have  been  and  per- 
haps for  many  years  to  come  they  will  be  one  of  the  most  im- 
portant factors,  if  not  the  most  important  factor,  in  the  develop- 
ment of  our  foreign  trade?  These  are  problems  which  should 
have  your  very  serious  attention. 

192 


The  Making  of  an  Export  Policy 


The  Manufacturers'  Export  Agent 

Let  us  suppose  now  for  a  moment  that  you  have  decided  to 
do  business  through  a  manufacturers'  export  agent  handling  your 
line  together  with  other  lines.  Many  of  the  questions  which  I 
have  asked  you  with  reference  to  the  export  commission  house 
are  equally  applicable  to  a  business  conducted  through  a  manu- 
facturers' agent.  But  there  are  one  or  two  other  questions  which 
I  would  like  to  put  to  you  for  consideration,  with  special  refer- 
ence to  this  method  of  doing  an  export  business.  In  the  first 
place,  would  you  be  willing,  if  you  were  considering  the  develop- 
ment of  a  business  in  California,  to  put  the  representation  of 
your  goods  in  the  hands  of  an  agent  who  had  taken  your  line, 
let  us  say  machinery,  and  intended  to  handle  it  in  conjunction 
with  office  furniture,  flour,  chemicals,  needles  and  other  notions? 
Do  you  think  that  you  would  be  able  to  get  the  kind  of  sales 
service  which  you  require?  Supposing  that  you  were  a  manufac- 
turer of  brass  beds,  would  you  be  willing  to  put  your  agency 
for  the  Pacific  Coast  in  the  hands  of  a  representative  devoting 
himself  exclusively  to  furniture  and  handling  other  lines  of  house- 
hold furniture  together  with  refrigerators,  lamps,  bedding,  desks, 
bookcases,  filing  devices,  etc?  In  other  words,  would  you  be 
willing  to  place  your  interests  in  the  hands  of  a  specialist?  Or, 
would  you  place  them  in  the  hands  of  a  general  agent?  Do  you 
believe  that  any  manufacturers'  agent  will  put  as  much  time  and 
as  much  energy  into  the  development  of  a  line  from  which  he 
cannot  get  large  returns  as  he  will  put  into  a  line  from  which  he 
can  get  very  large  returns  ? 

To  a  considerable  extent  the  questions  which  I  have  raised 
with  reference  to  backing  up  the  export  man  in  his  effort  to 
develop  a  foreign  market,  apply  with  equal  force  to  the  decisions 
which  you  must  make  in  building  up  a  foreign  market  through 
the  manufacturers'  export  agent.  You  must  decide  for  your- 
selves the  percentage  of  commission  and  the  amount  of  appro- 
priation that  you  think,  after  a  careful  study  of  the  market,  will 
give  you  a  real  selling  service  in  that  market  and  will  produce 
real  results. 

As  a  matter  of  fact,  and  of  greatest  importance  in  connec- 
tion with  your  selling  campaign,  have  you  decided  to  do  your 
business  in  all  parts  of  the  world  in  exactly  the  same  way  and  by 
exactly  the  same  methods  ?  Is  it  your  idea  to  handle  the  Canadian 
market  in  exactly  the  same  way  in  which  you  would  handle  the 

193 


Fourth  Session — Tuesday  Morning 


Chinese  market,  or  the  Indian  market  ?  Is  it  not  possible  that  for 
the  particular  kind  of  goods  which  you  are  manufacturing  the 
attention  of  a  commission  house  may  be  required  in  one  part  of 
the  world  and  direct  selling  in  another,  and  perhaps  in  still  a 
third  you  may  find  it  worth  while  to  do  business  through  a  manu- 
facturers' export  agent?  And  if  you  think  that  a  combination 
of  these  methods  would  be  most  satisfactory,  have  you  decided 
in  what  markets  to  make  use  of  that  method  of  selling?  But  a 
combination  of  export  methods  again  brings  in  its  train  many 
knotty  questions.  You  are  at  once  involved  in  the  difficulties  of 
protecting  certain  markets  for  your  own  or  for  your  exclusive 
agencies.  It  is  the  common  practice  among  export  houses  to  re- 
fuse information  as  to  the  name  of  the  customer  and  occasionally 
as  to  the  destination  of  the  goods.  If  you  are  to  protect  your 
agents  it  is  essential  that  you  should  know  the  destination  of  your 
goods.  Are  you  prepared  to  require  that  information  of  your 
export  houses?  And  are  you  aware,  as  one  export  man  put  it 
to  me,  that  "the  refusal  of  the  export  house  to  reveal  destina- 
tion means  that  there  is  some  funny  business  going  on  some- 
where?" This  did  not,  of  course,  refer  to  the  customer's  name. 
You  must,  therefore,  in  order  to  work  out  a  successful  combina- 
tion of  methods  have  a  thorough  understanding  with  each  of  your 
representatives  and  customers. 

The  Advertising  Problem 

In  connection  with  your  selling  campaign  in  foreign  markets, 
have  you  decided  to  advertise?  Have  you  decided  to  use  the 
many  excellent  export  periodicals  which  are  at  your  disposal? 
Have  you  decided  to  use  the  native  papers  printed  in  English 
or  in  the  native  language?  Have  you  decided  to  set  aside  an  ad- 
vertising appropriation  equal  in  size  for  the  same  volume  of  busi- 
ness the  advertising  appropriation  which  you  would  set  aside 
for  use  in  the  domestic  market  ? 

Is  your  advertising  problem  that  of  introducing  your  firm 
and  its  branded  goods?  Is  it  the  problem  of  creating  a  trade 
demand  for  your  goods?  Is  it  the  problem  of  creating  a  con- 
sumer's demand?  Is  it  the  problem  of  meeting  competitors  al- 
ready existing  in  an  established  market?  Or,  is  it  that  most 
difficult  problem  of  introducing  an  article  for  which  no  demand 
exists  ? 

Is  it  the  purpose  of  your  advertising  to  secure  direct  orders? 
Is  its  purpose  to  secure  commission  house  orders  ?  Is  its  purpose 

194 


The  Making  oj  an  Export  Policy 


to  precede  a  local  selling  campaign?  Is  its  purpose  to  follow  up 
and  keep  alive  the  effects  of  a  local  selling  campaign  ? 

Have  you  decided  to  employ  a  special  man  who  is  familiar 
with  advertising  conditions  in  foreign  countries  and  with  the  peri- 
odicals which  exist  there,  and  who  is  able  to  criticize  your  adver- 
tising from  the  point  of  view  of  the  psychology  of  the  market 
which  you  are  exploiting?  More  important,  have  you  located 
your  man? 

Have  you  decided  to  carry  on  a  campaign  of  circularization  ? 
Is  this  campaign  of  circularization  designed  to  solicit  orders  di- 
rect or  is  it  designed  to  assist  your  salesmen  or  to  assist  your 
local  agencies,  or  even  to  assist  the  retailer?  Here  again,  are 
you  prepared  with  the  proper  translating  service  to  write  circu- 
lars and  letters  which  will  be  in  the  language  of  the  country,  in 
the  idiomatic  language  of  the  country,  and  not  in  a  "pidgin" 
language  which  will  expose  you  to  the  ridicule  of  your  would-be 
customers  ? 

What  inducements  are  you  prepared  to  hold  out  to  an  ex- 
clusive local  agent?  What  would  you  think  of  this  proposition, 
which  a  prominent  exporter  considers  a  fair  one!  "(i)  Exclus- 
ive rights  for  ten  years;  (2)  Services  of  a  salesman  for  six 
months  during  the  first  year  only;  (3)  $5,000  for  publicity  during 
the  first  year;  (4)  Correspondence  by  the  company  with  10,000 
prospects;  (5)  Ten  demonstrating  outfits  free;  (6)  Entertain- 
ment of  twenty  biggest  users  of  the  product  during  the  first  year. 
The  agent  must  guarantee  a  certain  minimum  amount  of  sales." 

Now  these  are  only  a  few  points  which  you  as  a  manufac- 
turer should  consider  before  embarking  on  a  foreign  selling  cam- 
paign, and  they  and  many  others  are  points  which  you  should 
decide  before  you  send  a  salesman  into  the  field,  before  you 
establish  a  single  exclusive  agency,  and  before  you  make  any 
proposition  to  any  professional  export  concern. 

IV.     Deciding  on  a  Home  Export  Policy 

I  wonder  if  most  of  the  manufacturers  who  intend  to  em- 
bark in  the  export  trade  realize  that  a  definite  policy  must  be 
adopted  at  home  as  well  as  in  the  foreign  field  ?  As  a  matter  of 
fact  some  of  the  most  important  decisions  which  the  manufac- 
turer can  make  with  reference  to  foreign  trade  are  to  be  made  at 
home,  with  reference  to  his  home  organization,  with  reference  to 
his  methods  in  the  United  States,  with  reference  to  production 

195 


Fourth  Session — Tuesday  Morning 


in  his  plant,  and  with  reference  to  matters  which  are  seemingly 
not  directly  in  the  foreign  department. 

Are  you,  as  a  manufacturer,  going  to  manufacture  for  ex- 
port; or  are  you  going  to  export  what  you  have  manufactured? 
The  difference  between  these  apparently  similar  questions  is 
the  difference  between  success  and  failure.  I  have  already 
referred  to  the  plow  manufacturer  and  I  should  like  for  a  moment 
to  carry  that  illustration  a  little  further.  I  know  of  one  plow 
manufacturer  who  sent  a  man  to  Argentina.  It  was  his  business 
to  get  the  facts  about  conditions  there.  He  actually  worked  in 
the  fields.  He  found  out  exactly  the  kind  of  a  plow  suitable  to 
that  particular  trade  and  to  those  peculiar  soil  conditions.  He 
sent  a  cablegram,  at  a  cost  of  many  hundred  dollars,  instructing 
the  manufacturer  in  detail  as  to  changes  which  must  be  made  in 
order  to  meet  the  conditions  in  Argentina.  But  the  superin- 
tendent objected.  "We  can't  make  those  changes,"  he  told  the 
manufacturer.  "It  would  involve  the  alteration  of  our  entire 
manufacturing  methods."  But  the  manufacturer  knew  his  busi- 
ness and  he  knew  his  man  and  so  he  said  to  the  superintendent : 
"I  have  confidence  in  the  man  I  have  sent  to  Argentina  and  the 
plows  for  that  market  are  to  be  made  in  the  way  which  he  de- 
sires. You  follow  his  instructions."  The  result  was  a  large, 
profitable  trade  built  up  in  Argentina.  That  is  what  I  mean  when 
I  refer  to  a  home  export  policy,  and  this  illustration  also  shows 
the  need  of  executive,  high  executive,  direction. 

Another  manufacturer,  about  the  same  time,  without  investi- 
gating and  without  adequate  preparation,  sent  a  consignment  of 
plows  to  Venezuela.  When  the  plows  got  there  it  was  found  that 
they  could  not  be  used  for  the  simple  reason  that  instead  of 
horses,  oxen  are  used  and  the  plows  are  attached  to  the  horns. 
This  gave  the  plow  such  a  tilt  that  the  share  would  not  go  into  the 
soil.  The  result  was  that  the  manufacturer  lost  not  only  the  cost 
of  the  plows,  but  also  the  freight,  the  duties  and  all  of  the  other 
expenses  attached,  a  small  item  of  some  $2,600. 

Are  you,  therefore,  as  a  manufacturer,  prepared  to  meet  the 
needs  of  the  markets  and  are  you  prepared,  when  it  comes  to  a 
matter  of  taste,  to  meet  the  tastes  of  the  markets?  Are  you 
prepared  to  readjust  your  factory  processes  to  meet  the  export 
situations  that  involve  conditions  somewhat  different  from  those 
which  you  may  have  to  meet  in  the  domestic  market? 

Now  do  not  misunderstand  me.  I  am  not  urging  that  you 
should  so  vary  your  manufacturing  methods  as  to  lose  economies 

196 


The  Making  of  an  Export  Policy 


which  result  from  standardization  or  large  scale  production.  The 
very  fact  that  you  have  a  standardized  product  and  the  very 
fact  that  your  production  is  on  a  large  scale  may  be  your  export 
salvation.  It  may  mean  that  you  are  able  to  place  a  high  grade 
product  in  a  market  which  would  otherwise  be  inaccessible  to  you. 
The  great  advantage  which  the  American  manufacturer  has  in 
competition  with  his  rivals  abroad  is  that  he  has  a  standardized 
product  manufactured  on  a  large  scale.  Perhaps  one  of  the  best 
illustrations  I  could  bring  to  you  is  the  matter  of  cotton  goods. 
European  manufacturers,  particularly  English  manufacturers, 
are  prepared  to  manufacture  short  lengths  of  different  patterns 
and  different  qualities  of  different  types  of  goods.  They  have 
developed  their  manufacturing  methods  in  such  a  way  that  it  is 
possible  for  them  to  compete  with  American  manufacturers;  in 
fact,  to  undersell  them  where  the  lengths  are  short  and  the 
quantities  are  small.  But  where  cotton  goods  are  wanted  not  by 
hundreds  of  yards  but  by  miles,  American  manufacturers  of  cot- 
ton goods  have  told  me  that  they  can  compete  with  and  can  under- 
sell any  other  manufacturers  in  any  market  in  the  world.  A  simi- 
lar illustration  might  be  drawn  of  a  popular  automobile  which 
competes  successfully  with  automobiles  manufactured  in  other 
countries.  It  is  able  so  to  compete  because  a  single  type  of  auto- 
mobile is  turned  out.  It  does  not  vary  even  by  the  color  of  the 
machine.  It  is  fruitless  and  irrelevant,  therefore,  for  the  agent 
of  that  automobile  in  Java  to  say  that  if  it  were  painted  red  it 
would  have  a  larger  sale  in  Java.  As  a  matter  of  fact,  if  the 
style  of  the  automobile  were  varied  even  by  so  small  a  matter  as 
a  coat  of  paint,  the  cost  would  be  disproportionately  raised  and  it 
might  not  be  able  to  compete  at  all. 

Some  other  questions  with  reference  to  your  home  export 
policy :  Are  you  prepared  to  pack  in  a  way  which  will  guarantee 
the  safe  arrival  of  your  goods  in  foreign  markets  ?  Are  you  pre- 
pared to  pack  according  to  instructions  which  are  sent  to  you  by 
your  foreign  customers  or  by  export  houses  through  whom  you  do 
business  ?  Are  you  prepared  so  to  arrange  your  shipping  depart- 
ment and  so  to  alter  your  packing  methods  that  you  will  be  able 
to  meet  the  requirements  of  your  foreign  buyers?  And  are  you 
prepared  to  ship  not  only  as  instructed  but  when  instructed  ?  Are 
you  prepared  so  to  adjust  your  shipping  methods  that  when 
goods  are  wanted  for  shipment  on  such  and  such  a  steamer,  they 
will  be  shipped  on  such  and  such  a  steamer  and  will  not  be  de- 
layed by  so  much  as  an  hour,  because  the  delay  of  an  hour  here 

197 


Fourth  Session — Tuesday  Morning 


may  mean  the  delay  of  a  month  at  the  other  end?  These  are 
things  which  you  must  decide  and  these  are  ways  in  which  you 
must  support  your  foreign  sales  campaign  in  your  own  organiza- 
tion at  home. 

V.     Deciding  on  a  Price  Policy 

And  now  having  decided  the  few  questions  which  I  have 
raised  so  far,  we  come  to  another  and  important  policy  to  be 
determined,  and  that  is  your  price  policy.  The  first  and  most 
important  question  is — what  is  to  be  your  export  price?  Is  it  to 
be  the  same  as  your  domestic  price  ?  Is  it  to  be  higher  than  your 
domestic  price  or  lower  than  your  domestic  price  ?  Are  you  pre- 
pared and  do  you  intend  to  protect  your  export  house  on  matters 
of  price?  Do  you  intend  to  make  the  same  price  to  any  inquirer, 
however  small  or  however  little  known,  in  a  foreign  country,  that 
you  would  make  your  export  house,  which  is  handling  the  bulk 
of  your  export  business  ?  Or  supposing  that  you  have  established 
an  exclusive  agency  in  some  foreign  market,  do  you  propose  to 
give  any  importer  or  dealer  in  the  same  territory  the  same  price 
that  you  give  the  agency  ?  Or,  if  you  have  decided  to  go  into  the 
business  direct  and  through  your  own  representatives  and  agents. 
do  you  intend  to  give  to  the  importer  located  in  a  foreign  market 
exactly  the  same  price  that  you  are  prepared  to  give  to  some 
small  dealer  or  retailer  or  occasional  inquirer?  Do  you  intend 
to  carry  the  careful  distinction  between  jobber  and  wholesaler 
which  you  make  at  home  into  the  foreign  market?  In  other 
words,  the  same  questions  of  price  policy  come  up  for  decision  in 
the  foreign  market,  with  even  additional  complications,  that  come 
up  in  reference  to  the  price  policy  in  your  domestic  market,  and 
they  must  be  decided  with  greater  care  on  account  of  the  dis- 
tance and  possibility  of  misinterpretation. 

Just  here  let  me  take  occasion  to  point  out  a  fallacy  which 
often  is  characteristic  of  our  discussions  of  foreign  trade,  and 
that  is,  that  price  is  the  most  important  element  in  getting  export 
trade.  Price  is  an  important  element  but  there  are  other  elements 
which  are  just  as  important.  As  a  matter  of  fact,  American 
goods  have  made  themselves  popular  the  world  round  not  because 
they  are  low  in  price,  for  some  of  them  are  not,  but  because  the 
buyer  in  foreign  countries  usually  knows  that  when  he  gets 
American  goods  he  gets  quality,  and  for  that  reason  certain  high- 
priced  articles  of  American  manufacture  are  known  and  preferred 
everywhere.  Our  manufacturers  have  stood  solidly  on  the  basis 
of  quality  and  have  not  altered  their  prices  and  have  not  altered 

198 


The  Making  of  an  Export  Policy 


the  quality  of  their  goods  to  meet  foreign  competitors'  prices. 
There  are  other  important  elements,  as  for  example,  service. 
Price  and  quality  are  often  comparatively  unimportant  without 
adequate  service.  If  the  American  manufacturer  develops  in  for- 
eign markets  the  same  kind  of  service  that  he  gives  in  domestic 
markets,  he  is  sure  to  win  out.  Price  becomes,  therefore,  not 
the  most  important  item  in  getting  an  export  business  but  only 
one  of  the  important  elements. 

Finally,  do  you  intend  to  dump  your  surplus  production  in 
foreign  markets  ?  If  you  have  decided  to  dump  a  surplus  product 
in  foreign  markets  at  prices  lower  than  those  which  you  charge 
in  domestic  markets,  have  you  fully  taken  into  consideration  the 
fact  that  you  have  made  the  definite  decision  that  you  are  not 
going  into  foreign  trade?  Do  you  realize  that  when  you  have 
decided  to  dump  your  products  abroad  you  have  decided  on  a 
temporary  price  policy  unless  you  are  fully  prepared  to  continue 
the  definite  and  permanent  policy  of  selling  in  foreign  markets  at 
a  price  lower  than  your  domestic  price?  If,  however,  you  sell 
at  a  lower  price  in  a  foreign  market  merely  in  order  to  get  rid 
of  a  surplus  product,  you  are  doing  the  thing  which  is  best  calcu- 
lated to  close  up  your  foreign  trade  at  an  early  date. 

VI.     Deciding  on  a  .Credit  Policy 

Now  we  come  to  the  very  marrow  of  the  whole  export 
problem.  Are  you,  or  are  you  not,  prepared  to  give  credit  to 
foreign  purchasers? 

You  have  at  your  disposal  in  financing  your  export  ship- 
ments seven  important  methods.  I  enumerate  them  in  this  inac- 
curate way  merely  for  convenience : 

(a)  Cash  in  New  York  or  cash  with  order. 

(b)  Cash  against  documents. 

(c)  Sight  draft. 

(d)  30  days  sight. 

(e)  90  days  sight 

(f )  Long  time  credits  with  interest. 

(g)  Open  account  or  open  credit. 

If  you  are  going  to  do  a  direct  export  business  and  do  not 
expect  to  use  either  the  manufacturers'  agent  or  the  commission 
house,  we  can  at  once  discard  the  first  four  methods,  because 
you  might  as  well  get  this  fact  clearly  in  mind  now  as  some  time 
later,  after  bitter  experience,  that  you  cannot  develop  a  direct  ex- 
port business  by  demanding  cash  in  New  York,  cash  against 

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Fourth  Session — Tuesday  Morning 


documents,  sight  draft  or  30  days  sight.  The  usual  terms  for  ex- 
port business  outside  of  some  European  markets  are  90  days  sight 
and  longer.  Nor  can  you  argue  from  the  experience  that  you 
may  have  had  during  the  last  few  months  that  you  will  be  able  to 
do  the  business  differently  when  conditions  are  normal  once  more. 
The  present  conditions  are  most  extraordinary.  Foreign  buyers 
who  are  willing  to  pay  you  cash  in  New  York  at  the  present — 
especially  is  this  true  of  European  buyers — will  not  do  so  after 
the  present  extraordinary  conditions  have  ceased  to  exist.  You 
must  face  the  fact  that  if  you  intend  to  do  a  direct  export  busi- 
ness you  must  be  prepared  to  finance  your  shipments  at  90  days 
sight  or  longer.  Now  this  statement  does  not  mean  that  you  can 
not  do  an  export  business  on  any  other  basis.  It  means  that  if 
you  want  your  money  in  advance  or  in  cash  you  must  do  busi- 
ness through  a  middleman.  I  cannot  put  this  too  emphatically, 
because  there  is  no  other  alternative. 

One  of  the  chief  functions  of  the  export  house,  and  the 
function  which  will  probably  develop  increasingly  during  the  next 
few  years,  is  to  finance  your  shipments  when  you  desire  or  de- 
mand cash  at  the  seaport.  The  export  house  is  prepared  to 
finance  shipments  abroad  when  the  manufacturer  is  unwilling  or 
unable,  either  with  his  own  capital  or  with  what  credit  he  may 
have  at  his  bank,  to  finance  his  export  shipments.  It  is  worth 
while  for  you  to  recognize  this  fact  when  deciding  on  the  method 
which  you  will  use  when  inaugurating  your  foreign  trade  cam- 
paign. 

Are  you  prepared,  therefore,  to  make  the  decision  whether 
you  will  extend  the  usual  and  ordinary  terms  of  credit  in  foreign 
markets,  or  whether  you  will  demand  cash  payment  in  New 
York?  If  you  have  chosen  the  latter  course,  are  you  prepared  to 
do  business  through  a  middleman?  And  if  you  decide  to  do 
business  direct  and  on  the  usual  credit  terms,  are  you  prepared  to 
establish  a  foreign  credit  department?  Are  you  prepared  to  col- 
lect the  necessary  credit  information  ?  Are  you  prepared  to  take 
the  usual  credit  risks  ?  Are  you  prepared  to  get  the  information 
with  reference  to  foreign  credits  which  can  be  supplied  to  you  by 
the  National  Association  of  Manufacturers,  by  the  Philadelphia 
Commercial  Museum,  by  banks  doing  a  foreign  business,  and  by 
the  commercial  credit  agencies?  In  addition,  however,  are  you 
prepared  to  collect  a  considerable  amount  of  credit  information  at 
first  hand  and  through  your  own  personal  representatives  ? 

200 


The  Making  oj  an  Export  Policy 


This  is  another  of  the  important  decisions  which  you  must 
make  before  initiating  your  foreign  trade  campaign. 

VII 

Having  reviewed  briefly  some  of  the  important  questions 
which  you  must  decide  before  embarking  on  a  foreign  trade  cam- 
paign, let  me  call  to  your  attention  some  of  the  important  factors 
which  will  play  a  part  in  determining  your  decisions  on  each  of 
these  points.  I  will  only  enumerate  them : 

(a)  What  is  the  volume  of  your  business? 

(b)  Is  your  business  in  a  staple  commodity  or  is  it  in  a 
specialty  or  specialties  ? 

(c)  Is  there  a  large  or  small  margin  of  profit  on  your  sales? 

(d)  Is  your  product  one  which  can  easily  be  shipped  with- 
out deterioration  ? 

(e)  Is  your  product  one  which  is  in  need  of  constant  and 
personal  sales  attention  ? 

(f)  Have  you  a  considerable  amount  of  capital  in  your  busi- 
ness, capital  with  which  to  extend  your  business,  and  is  your 
credit  at  your  bank  in  Ai  condition? 

(g)  Finally,  have  you  plenty  of  business  brains  and  horse 
sense  in  your  organization? 

Perhaps  I  have  emphasized  the  difficulties  in  the  export  trade 
more  than  I  had  intended.  I  know  I  have  omitted  to  mention 
the  advantages  and  rewards  which  follow  the  building  up  of  a 
great  foreign  trade.  The  live  manufacturer,  however,  doesn't 
need  much  prodding  to  make  him  see  the  advantage  of  a  great 
international  market  for  his  products.  It  is  only  the  old-timer, 
the  manufacturer  of  narrow  and  restricted  outlook,  who  doesn't 
see  the  concrete  benefits  which  he  may  obtain.  That  manufac- 
turer would  scarcely  be  at  this  meeting.  I  can,  therefore,  I  ven- 
ture to  hope,  leave  the  painting  of  the  brighter  parts  of  the  picture 
to  the  other  speakers,  and  to  you  manufacturers  who  see  "better 
than  any  of  us,  the  real  advantages  in  foreign  trade. 

In  every  point  which  I  have  made,  I  have  tried  to  emphasize 
the  necessity  of  taking  up  export  problems  in  exactly  the  same 
way  in  which  you  would  tackle  your  domestic  problems.  The 
problems  are  differently  clothed,  the  conditions  vary,  the  language 
is  unfamiliar,  but  the  essentials  of  business  success  are  the  same. 

The  export  business  is  one  in  which  you  manufacturers  meet 
not  only  your  competitors  in  this  country  but  your  competitors 

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Fourth  Session — Tuesday  Morning 


in  other  countries.  It  is  a  business  in  which  you  go  forth  relying 
only  on  your  own  skill,  your  own  enterprise,  your  own  ability, 
your  own  efficiency,  to  meet  an  opponent  who  is  likewise  relying 
only  on  your  own  skill,  your  own  enterprise,  your  own  ability, 
The  export  business  should  appeal  to  every  American  manu- 
facturer who  believes  in  himself  and  who  prides  himself  on  his 
ability  to  succeed. 

T  thank  you  very  much.     (Applause.) 


THE  CHAIRMAN  :  Gentlemen,  I  have  always  had  the  greatest 
hopes  for  our  foreign  trade,  and  I  want  to  say  to  you  now  that 
my  hopes  have  never  been  so  high  as  they  are  at  this  moment, 
when  I  know  that  this  great  government  can  take  hold  of  such 
men  as  Dr.  Pratt  and  put  them  into  the  harness  to  help  us  do  our 
work.  (  Applause. ) 

We  will  now  have  a  discussion  upon  this  matter,  and  I  will 
ask  if  Mr.  Charles  Denby  is  present,  vice-president  of  the  Hupp 
Motor  Company.  He  has  been  selected  to  open  the  discussion. 
He  does  not  appear  to  be  here  now.  The  discussion,  therefore, 
is  in  the  hands  of  this  assembly.  Will  someone  speak  to  the  ques- 
tion? 

DR.  KRYSHTOFOVICH  :  I  thank  Dr.  Pratt  very  much  for  his 
able  address.  He  is  a  wonderfully  inquisitive  man — he  put  so 
many  questions — I  think  about  two  hundred  if  one — that  I  am 
afraid  that  he  has  completely  terrorized  American  manufacturers 
here  by  asking  them  so  much  ''Are  they  ready,"  "Are  they  pre- 
pared," and  so  on. 

For  many  years  I  was  living  in  this  country,  and  my  opinion 
is  that  American  manufacturers  and  American  business  men  are 
extremely  bold  at  home  and  extremely  timid  abroad. 

By  putting  so  many  questions  of  an  intimate  nature,  of 
course,  you  make  export  business  very  difficult;  but  I  am  afraid 
that  American  business  men  are  so  busy — in  one  newspaper  I 
found  a  good  explanation — the  American  business  man  is  so 
busy  that  he  cannot  realize  how  happy  he  is. 

I  say  if  American  manufacturers  should  try  to  answer  all 
of  these  questions  which  have  been  asked  by  Dr.  Pratt  he  would 
be  completely  terrorized,  and  would  be  afraid  to  go  ahead. 

I  think,  Dr.  Pratt,  it  would  be  well  to  encourage  him  a  little 
more. 

Let  me  give  you  a  little  instance,  which  may  seem  somewhat 
strange. 

202 


The  Making  oj  an  Export  Policy — Discussion 

One  of  the  officials  of  a  large  exporting  house  in  New  York 
told  me  a  story.  Their  president  went  to  Russia  and  wanted  to 
start  a  large  business,  but  the  president  was  a  little  nervous  and 
besides  did  not  speak  Russian.  So  he  came  to  Moscow  and 
came  to  some  warehouse  and  tried  to  find  out  prices  and  con- 
ditions. Unfortunately,  our  people  are  very  slow.  He  began  to 
find  out  prices  and  to  change  from  Russian  money  into  Amer- 
ican money  and  from  Russian  measures  to  American  measures, 
and  this  gentleman  was  so  much  tired  that  he  went  away  from 
Russia  and  does  not  want  to  go  there  again.  (Laughter.) 

THE  CHAIRMAN:  Is  there  any  further  discussion? 

MR.  FLAGG  :  I  would  like  to  ask  Dr.  Pratt  whether  the  figures 
which  he  gave  as  to  the  relative  increase  in  commerce  of  this 
country  represented  the  increase  in  total  commerce  or  whether 
it  was  the  increase  in  our  exports  to  those  countries.  He  men- 
tioned Australia,  I  think,  as  being  about  75  per  cent.  Is  that 
the  total  commerce,  or  is  it  exports  from  this  country  ? 

DR.  PRATT:  Those  are  exports  from  the  United  States.  I 
have  compared  the  four  months,  June,  July,  August  and  Septem- 
ber, 1913,  with  the  same  months,  1915,  because  it  was  in  June 
that  this  rather  new  wave  began.  It  was  about  June  that  there 
seemed  to  a  turning  point  from  the  old  down  grade  to  the  new 
up  grade. 

CAPT.  WHITE:  I  would  like  to  ask  Dr.  Pratt  what  the  effect 
of  treaty  relations  or  the  lack  of  treaty  relations  is  going  to  be 
upon  our  export  trade? 

DR.  PRATT  :  That  is  a  rather  large  question.  It  could  scarcely 
be  answered  in  a  few  moments. 

I  think  that  commercial  treaties  which  other  countries  may 
enter  into  following  the  European  war  and  which  we  may  enter 
into  with  other  countries  following  the  European  war  are  per- 
haps one  of  the  most  essential  parts  of  a  government  policy  with 
reference  to  foreign  trade. 

I  believe  that  we  are  now  making  preparations  for  such 
commercial  treaties  to  go  into  effect  after  the  European  war,  and 
I  think  that  there  will  probably  be  no  more  important  duty  before 
the  government  with  reference  to  foreign  trade  than  the  formula- 
tion of  those  treaties. 

MR.  MONTT:  I  want  to  avail  myself  of  the  opportunity  to 
ask  Dr.  Pratt,  now  that  we  are  talking  of  business  after  the  war: 
Are  you  bullish  on  South  America  after  the  war  is  over  or  are 
you  bearish  on  it?  You  mentioned  the  fact  that  the  rates  of 

203 


Fourth  Session — Tuesday  Morning 


labor  abroad  will  be  higher,  on  account  of  the  reduced  supply, 
and  you  say  that  taxation  will  add  to  the  cost  of  production  in 
European  countries.  I  think  further  that  the  depreciation  of  the 
currency  in  Europe  will  have  a  very  decided  effect  in  raising 
wages  in  Europe  after  the  war  is  over,  and  would  keep  the 
wages  high  for  a  long  time,  even  after  the  currency  goes  back  to 
normal  value.  I  have  had  very  hot  arguments  on  this,  and  I 
know  some  people  have  just  the  opposite  view.  I  am  bullish  on 
South  America  myself,  because  I  believe  in  it,  but  I  would  like 
to  hear  what  Dr.  Pratt  has  to  say  about  it,  what  he  thinks 
frankly  upon  the  whole  on  that  subject. 

DR.  PRATT:  That  is  another  big  contract.     (Laughter.) 

Of  course,  South  America  and  China  are  the  only  two  large 
markets  which  are  now  out  of  the  European  conflict,  with  the 
exception  of  the  United  States ;  and  I  feel  that  the  United  States 
and  the  manufacturers  of  the  United  States  are  going  to  be  in 
a  very  much  better  position  to  compete  in  those  markets  which 
are  now  entirely  outside  of  the  range  of  hostilities  than  they 
have  ever  been  before,  because  it  seems  to  me,  as  I  said  very 
briefly  in  my  first  remarks,  that  there  are  decided  reasons  why  the 
cost  of  production  and  prices  in  general  are  going  to  be  decidedly 
higher  in  Europe  than  they  have  ever  been  before.  I  said  that 
I  thought  wages  would  go  up  because  there  is  going  to  be  such  a 
labor  shortage,  that  capital  will  be  more  expensive,  because  it 
has  been  wasted ;  it  has  not  been  devoted  to  productive  enterprises 
during  the  last  year,  and  perhaps  for  many  months  to  come  it  will 
not  be.  But  there  is  going  to  be  a  tremendous  burden  of  taxation 
on  the  manufacturers  which  is  not  being  met  out  of  the  present 
income  at  all;  it  will  be  spread  out  over  the  next  fifty  or  seventy- 
five  years. 

All  of  those  things,  it  seems  to  me,  are  going  to  raise  the 
level  of  prices  in  Europe  to  a  very  large  extent. 

We  are  experiencing  a  certain  rise  in  prices  in  the  United 
States,  but  I  do  not  believe  that  that  rise  in  prices  is  going  to 
come  near  equalling  the  rise  in  prices  and  cost  of  production 
abroad. 

Not  only  is  this  increase  to  be  expected  on  theoretical 
grounds,  but  if  you  will  go  back  into  the  history  of  every  consider- 
able war  during  the  last  century,  you  will  find  that  after  the  Na- 
poleonic War,  the  Crimean  War,  the  Franco-Prussian  War, 
and  last  of  all  the  Russo-Japanese  War,  wages,  especially  in  the 
skilled  trades  in  the  countries  affected,  went  up  considerably. 

204 


The  Making  of  an  Export  Policy — Discussion 

•       I  •-  i-l  .:    fi  -    S  9       : 1    •      -M 

In  Japan,  immediately  after  the  Japanese-Russian  war,  in  some 

skilled  occupations  the  increase  amounted  to  as  much  as  eighty 
per  cent.  The  same  thing  is  true  of  capital.  For  example,  the 
London  bank  rate,  which  stood  at  an  average  of  about  three  per 
cent,  for  ten  years  preceding  the  Crimean  War,  stood  at  4% 
per  cent,  in  the  five  years  succeeding  the  Crimean  War. 

The  same  thing  is  true  after  every  one  of  the  large  wars 
during  the  last  century.  If  you  can  definitely  get  a  period  before 
and  after  to  compare,  you  will  find  that  in  each  one  of  those  in- 
stances the  rates  of  labor,  capital  and  taxes  have  been  consider- 
ably increased;  and  it  is  also  shown  after  our  own  Civil  War  by 
a  standard  of  gold  prices. 

So  that  I  believe,  on  the  basis  of  experience  and  whatever 
logic  there  may  be  in  my  reasoning,  at  any  rate,  that  we  are 
going  to  have  a  period  of  very  high  prices  in  Europe,  and  that 
we  are  going  to  more  nearly — or  rather,  to  put  it  the  other  way — 
that  European  nations  are  going  to  more  nearly  approach  our 
price  level  than  ever  before.  (Applause.) 

MR.  Mo  NTT  :  Thank  you. 

MR.  COWLES  :  I  would  like  to  ask  Dr.  Pratt  a  question.  In 
the  first  place  I  want  to  state  this :  I  noticed,  within  a  day  or  two, 
that  Germany  and  Austria  are  preparing  for  absolute  freedom  of 
trade  between  those  two  countries.  I  noticed  that  when  our 
States  were  brought  together,  about  the  first  thing  done  in  1787 
was  to  provide  for  absolute  freedom  of  intercourse  between  all 
the  States  of  our  Union. 

I  would  like  to  ask  what  Dr.  Pratt  thinks  would  follow  a 
federation  of  the  world,  if  you  please,  absolute  freedom  of 
intercourse  between  all  the  people  of  all  the  different  nations 
upon  the  trade  of  this  country  with  the  outside  world? 

THE  CHAIRMAN:  Dr.  Pratt  thinks  this  is  a  question  that  is 
a  little  bit  too  large  for  him  to  consider  at  this  time.  I  think 
myself  it  is  a  very  comprehensive  one,  and  embraces  about  every- 
thing in  the  universe. 

MR.  COWLES:  May  I  say  just  one  word  as  to  that? 

THE  CHAIRMAN:  Surely. 

MR.  COWLES:  When  our  ancestors  came  together  in  1787 
they  found  my  little  State  of  Connecticut  practically  at  war  with 
the  State  of  New  York.  Every  other  State  in  the  Union  was 
practically  in  the  same  condition.  In  order  to  bring  them  together, 
and  in  order  to  have  prosperity  between  the  States  in  the  Union, 
they  provided  as  the  very  first  characteristc  of  our  Federal  Con- 

205 


Fourth  Session — Tuesday  Morning 


stitution  absolute  freedom  of  intercourse  between  all  the  people 
of   all   the   States.      Is   that   anything   strange,   anything   new? 

Haven't  we  tried  it  out  for  one  hundred  years  with  wonder- 
ful benefit  to  every  man,  woman  and  child  throughout  the  United 
States  of  America,  and  if  it  is  well  for  the  United  States  of 
America,  would  it  not  be  equally  as  well  for  the  United  States 
of  the  world,  the  federation  of  the  world,  the  dream  of  Tenny- 
son, the  dream  of  Montgomery  Blair,  the  dream  of  Lincoln? 

Is  it  strange,  does  it  require  any  great  amount  of  thought 
to  know  that  the  abolishment  of  the  obstacles  that  separate  na- 
tions, the  binding  of  them  together  by  a  great  postal  service  cover- 
ing the  entire  business  of  public  transportation  and  transmission, 
would  put  an  end  to  war  and  bring  prosperity  to  every  human 
being  throughout  this  entire  planet  ?  Isn't  that  absolutely  true  ? 

At  the  Economic  Club  here  last  winter  those  things  were 
thrown  out,  and  it  was  stated  that  you  could  never  do  away 
with  war,  that  you  could  never  have  peace  until  you  did  away 
with  the  legal  barriers  that  separate  men  and  nations. 

You  have  got  your  ships.  The  government  of  the  United 
States  today  is  nothing  but  a  joint  stock  corporation  that  has 
been  formed  for  the  benefit  of  all  of  us  and  for  the  benefit  of  all 
the  world. 

The  United  States  of  America,  as  the  leader  of  the  world, 
ought  today  to  offer  freedom  of  intercourse  to  the  people  of  all 
the  States ;  and  if  they  do  it  to  South  America  at  their  next  meet- 
ing I  tell  you  there  will  be  such  an  era  of  prosperity  here  and 
throughout  the  whole  of  this  America  as  the  world  has  never 
known.  (Applause.) 

THE  CHAIRMAN  :  Gentlemen,  we  have  with  us  the  Honorable 
A.  B.  Farquhar.  I  know  of  no  man  here  who  is  better  able  to 
respond  to  the  sentiment  which  has  just  been  expressed  than  Mr. 
Farquhar. 

MR.  FARQUHAR:  It  may  not  be  popular  with  manufacturers 
generally  what  I  have  to  say,  but  I  fully  concur  with  all  the 
speaker  has  just  said,  every  single  word  of  it,  although  I  have 
been  a  manufacturer  for  sixty  years,  and  I  have  been  exporting 
for  about  fifty  years.  I  endorse  every  word  that  he  said.  It 
was  a  most  luminous  oration,  but  he  is  connected  with  the  Gov- 
ernment, and  the  questions  of  tariff  have  unfortunately  become  po- 
litical questions.  They  have  no  business  whatever  in  politics. 
They  have  nothing  whatever  to  do  with  politics.  Tariffs  should 
be  settled  by  business  men,  men  that  are  acquainted  with  the 
subject.  (Applause.) 

206 


The  Making  of  an  Export  Policy — Discussion 

A  tariff  commission  of  experts  will  eventually  be  formed  and 
must  be  formed  at  the  close  of  the  war. 

We  cannot  do  away  with  tariffs  at  once,  of  a  sudden;  it 
must  be  a  gradual  process ;  it  must  be  done  in  a  way  not  to  dis- 
turb and  upset  trade  relations.  The  present  system  of  making 
tariffs  does  disturb  trade  relations  very  seriously.  A  commission 
of  experts  such  as  they  have  in  England  and  France  and  notably 
in  Germany  arranges  the  tariffs  so  as  not  to  affect  business  at  all. 

Eventually  we  should  have  free  trade  throughout  the  world. 
(Applause.)  It  will  come  with  the  dawn  of  the  millennium ;  there 
is  no  question  about  that.  It  eventually  will  come,  and  we  must 
recollect  that  free  trade  with  South  America  was  the  dream  of 
James  G.  Elaine,  who  was  a  notable  tariff  man.  (Applause.)  He 
advocated  free  trade  throughout  the  Southern  republics  and  the 
United  States.  I  think  nothing  would  do  more  to  cement  our 
trade  and  enlarge  our  trade  and  make  it  permanent  than  to 
have  free  trade  between  South  America  and  the  United  States. 
That  could  be  brought  about  as  a  trial,  without  injury  to  anybody 
and  with  benefit  to  everybody. 

MR.  COWLES:  I  want  to  say  that  the  tariffs  between  the 
States  were  abolished  at  one  stroke  by  the  adoption  of  the  Federal 
Constitution  in  1787,  and  immediately  prosperity  followed. 

CAPTAIN  WHITE:  May  I  have  about  three  minutes  to  answer 
these  gentlemen? 

THE  CHAIRMAN  :  Surely. 

CAPTAIN  WHITE  :  The  reason  that  free  trade  was  successful 
in  the  United  States  was  that  the  condition  of  the  people  in  the 
United  States  was  practically  the  same  all  over  the  United 
States,  the  condition  of  labor,  the  condition  of  the  individuals  in 
their  relations  to  each  other.  My  friend  shakes  his  head  (Mr. 
Cowles). 

I  have  seen  a  thoroughly  healthy,  wholesome,  hearty  Chinese 
subsisting  partially  on  the  food  that  was  thrown  away  from  a 
man-of-war.  There  are  three  hundred  and  fifty  million  China- 
men. The  Chinese  can  make  anything  under  the  sun  that  any- 
body else  can  make,  given  the  capital  and  a  little  instruction. 
They  are  willing  to  work  for  less  wages.  (Applause.) 

MR.  COWLES  :  The  cheapest  labor  in  the  world  is  the  Ameri- 
can mechanic. 

CAPTAIN  WHITE:  I  beg  your  pardon,  he  is  the  most  ex- 
pensive. 

THE  CHAIRMAN  :  Now,  gentlemen,  I  think  the  discussion  of 
this  matter  has  gone  just  about  far  enough  (laughter),  and 

207 


Fourth  Session — Tuesday  Morning 


the  time  for  its  consideration  has  fully  expired,  so  we  will  pass 
on  to  the  next  subject  for  consideration,  which  is :  "Credit  and 
the  Future  of  American  Foreign  Trade." 

This  paper  has  already  been  distributed  among  you  and  treats 
of  a  subject  of  great  importance  under  the  present  commercial 
conditions  that  prevail  throughout  the  world. 

The  author  of  it  is  a  gentleman  who  is  not  only  the 
banking  adviser  of  the  National  Association  of  Manufacturers, 
but  is  one  who  has  had  especially  wide  experience  in  business 
and  financial  affairs  generally,  not  only  in  the  United  States  but 
in  other  parts  of  the  world. 

I  have  great  pleasure  in  introducing  to  you  Mr.  V.  Gon- 
zales,  who  will  address  you  on  this  subject.  (Applause.) 

Address  of  Mr.  V.  Gonzales 

MR.  GONZALES:  Mr.  Chairman,  Ladies  and  Gentlemen:  I 
do  not  know  that  any  of  you  have  had  the  patience  or  the  time 
either  to  read  my  paper,  but  please  do  not  be  alarmed,  I  am  not 
going  to  read  it  or  speak  of  it.  I  am  simply  going  to  say  a  few 
words  in  what  may  be  called  tablet  form.  Before  saying  them, 
however,  I  wish  to  make  my  position  clear.  It  seems  that  be- 
cause my  name  is  so  Spanish  and  because  I  am  a  South  American 
by  birth  that  every  time  I  stand  up  the  people  expect  me  to  speak 
about  Latin  America.  I  am  not  going  to  speak  about  Latin 
America. 

A  gentleman  came  up  to  me  and  spoke  to  me  in  the  hall, 
and  wished  to  compliment  me  on  my  paper,  and  said  that  he  had 
read  it  and  had  been  very  much  interested  in  it,  and  he  said: 
"How  could  you  find  so  much  to  write  about  South  America?" 
There  is  not  a  single  word  about  South  America  in  it.  (Laugh- 
ter.) It  was  just  one  of  those  complimentary  lies  that  you  have 
to  take. 

It  is  true  that  a  few  months  ago  I  had  the  great  honor  of 
being  appointed  delegate  from  one  of  the  South  American  gov- 
ernments to  the  Pan-American  Financial  Conference.  I  accepted 
it  because  the  interests  to  be  discussed  there  were  not  in  conflict 
with  the  interests  of  this  country.  (Applause.)  I  am  living  here 
and  I  am  serving  this  country.  I  am  doing  more  than  working 
with  you;  I  am  working  for  you.  (Applause.)  I  may  have  a 
lot  of  defects ;  I  know  I  am  very  stupid,  but  there  is  one  thing  I 
do  have  and  that  is  loyalty:  I  believe  that  a  man  owes  loyalty 

208 


Credit  and  the  Future  of  American  Foreign  Trade 

to  the  country  where  he  lives,  and  that  if  he  does  not  feel  that 
way  about  it  he  should  get  out.     (Great  applause.) 

Now  you  will  allow  me  to  come  back  to  life.  (Laughter.) 
I  compare  the  present  situation  through  which  we  are  passing — 
and  you  will  understand  that  when  I  say  "we"  I  mean  you  and 
I,  this  country — I  compare  it  to  those  rich  pockets  of  ore  that  are 
found  in  the  earth  sometimes,  and  which  deceive  miners  very 
often.  But  even  gamblers,  as  the  miners  are,  try  to  ascertain 
how  big  the  pocket  is.  We  have  struck  one  of  the  richest  ore 
pockets  in  the  history  of  the  world,  and  we  do  not  know  how  big 
it  is,  how  rich  it  is;  and,  worst  of  all,  we  cannot  ascertain  it. 
There  is  no  means.  Nobody  knows  how  long  this  unfortunate 
war  is  going  to  last,  nor  what  the  effects  of  the  war  are  going 
to  be.  Nobody  knows  what  is  going  to  happen;  but  for  us  a 
great  deal  will  depend  on  what  we  do  at  this  time. 

Business  and  Sentiment 

We  are  receiving  a  lot  of  money  and  bonds,  from  other 
countries.  That  increase  of  income  that  we  are  receiving  is 
turning  around  and  around  and  around,  just  like  the  dogs  before 
they  go  to  bed  (laughter),  and  is  putting  in  motion  a  lot  of 
the  small  wheels  of  our  activities;  but  if  we  do  not  know  how 
to  apply  the  profits  we  are  earning,  we  are  going  to  find  ourselves, 
perhaps — I  hope  I  am  mistaken — at  the  end  of  the  war  with  the 
ill-will  of  the  whole  world.  I  hope  I  am  mistaken. 

I  am  not  allowed  to  pronounce  the  names  of  countries,  but 
you  know — uni-m,  um-m — they  are  not  going  to  be  thankful  at 
all  for  paying  exorbitant  prices  for  the  articles  they  need,  and 
when  every  dollar  wasted  may  mean  their  ruin — and — um-m, 
um-m,  somebody  else — is  not  going  to  be  thankful  for  that, 
either;  and  the  neutral  countries  are  not  going  to  be  thankful, 
because  we  have  done  absolutely  nothing  for  them. 

I  am  very  sorry  if  any  of  my  remarks  are  out  of  place,  or 
perhaps  impertinent,  but  I  am  supposed  to  speak  the  truth,  and 
the  truth  is  not  always  pleasant.  What  have  we  done  for  the 
rest  of  the  world  ?  Nothing. 

For  sixteen  months  we  have  been  pulling  the  strings  for 
ourselves  only,  and  each  one  pulling  his  own  strings,  too — 
not  even  a  concerted  movement  to  pull  the  strings  together 
(laughter) ;  and,  unless  we  make  those  ties  and  affiliations 
of  trade  that  will  be  lasting  after  the  war,  we  will  find  ourselves, 
as  I  said  before,  perhaps  hated  by  the  whole  world. 

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Fourth  Session — Tuesday  Morning 


If  you  heard  the  people  speak,  as  I  have  heard  the  people 
speak  in  my  office,  when  they  go  back  to  their  homes  disappointed 
on  coming  here  and  being  refused  credit,  you  would  know  what 
I  mean.  They  are  obliged  to  buy  for  cash,  as  a  rule.  They  buy 
what  they  can  and  they  protest  about  it,  and  they  go  back  to  their 
homes  with  vengeance  in  their  hearts,  and  prepare  to  go  back 
to  Europe  just  as  soon  as  Europe  is  again  on  its  feet. 

I  have  nothing  to  say  in  reply  to  that,  because  they  are 
right.  If  you  could  read  the  letters  of  the  people  from  other 
countries  who  complain  about  this  same  situation  you  would 
realize  how  true  these  words  are. 

Now,  no  country  in  the  world  is  demanding  charity.  No- 
body wants  to  receive  subscriptions  for  the  poor.  What  they 
want  is  commercial  and  financial  credit,  for  commercial  and  finan- 
cial purposes. 

I  have  been  asked  many  times  in  the  office  why  the  for- 
eign buyer  needs  more  credit  than  the  home  buyer.  I  have 
told  them — a  childish  answer,  perhaps — because  they  need  it. 

A  Comparison  of  Banking  Facilities 

You  must  have  in  mind  that  in  not  any  country  in  the  world 
have  they  got  the  facilities  that  we  have  in  this  country.  Can 
you  realize  that  we  have  here  30,0x30  banks  for  100,000,000 
people?  They  are  big  and  small,  but  they  are  turning  over 
the  money  to  the  community,  promoting,  creating,  fostering  local 
credit. 

Fancy  China,  with  its  three  or  four  hundred  million  people. 
They  should  have  120,000  banks.  They  have  not  got  ten.  Latin 
America  has  75,000,000  people.  They  should  have  22,000  banks, 
if  compared  to  us.  Perhaps  they  have  100.  The  means  of 
creating  and  turning  over  local  credit  are  not  so  ample  as  they 
are  in  this  country.  The  people  have  less  accumulations  of 
wealth.  The  amount  of  money  that  is  devoted  to  commercial 
purposes  is  smaller;  and  then,  above  all,  you  have  the  advantage 
of  distance.  It  is  very  easy  for  you,  here,  to  fill  an  order  for 
San  Francisco  from  New  York  in  about  a  week.  If  you  have 
to  send  it  in  a  rush,  you  can  send  it  by  express,  in  six  days. 
But  fancy,  in  Buenos  Aires  they  need  thirty  days  to  get  the 
goods.  In  Cape  Town,  in  Calcutta,  in  any  part  of  the  world, 
how  can  they  renew  their  stocks  as  quickly  as  your  merchants  do 
here? 

That  obliges  the  merchant  abroad  to  carry  six  or  seven  times 

210 


Credit  and  the  Future  o]  American  Foreign  Trade 

the  amount  of  goods  in  stock  that  you  carry  here.  The  Amer- 
ican manufacturers  say  sometimes  that  they  do  not  care  to  go 
down  there,  because  credit  in  this  country  is  safer  than  in  other 
countries.  That  is  absolute  nonsense.  The  honest  man  is  honest 
here  or  in  Afghanistan.  (Applause.)  The  man  who  will  pay 
is  just  as  near  to  you  in  42nd  Street  as  he  is  in  Calcutta ;  and  the 
man  who  will  not  pay  is  just  as  far  from  you  in  Jersey  City 
as  he  is  in  Buenos  Aires.  (Applause.)  The  merchant  abroad 
may  not  speak  the  English  language;  but,  for  God's  sake,  a  man 
does  not  necessarily  have  to  speak  the  English  language  to  be 
honest.  (Laughter  and  Applause.)  And  they  speak  about  the 
laws,  and  they  say  that  the  laws  of  the  other  countries  do  not 
give  the  American  manufacturer  protection.  The  laws !  But  the 
business  that  requires  the  protection  of  the  law  is  not  the  one 
you  want  to  go  after.  If  you  cannot  do  business  with  a  man 
without  the  law,  don't  do  it  at  all.  The  law  will  not  protect  you 
any  better. 

Those  countries  abroad  have  had  their  credit  facilities  and 
their  credit  machinery  tied  up  to  London.  London  was,  as 
you  all  know,  the  commercial  and  financial  center  of  the  world. 
Unfortunately,  this  war  has  disabled  it,  perhaps  for  a  time,  per- 
haps forever. 

Who  is  going  to  take  that  place?  What  city,  what  country, 
is  going  to  take  the  place  of  London?  And  the  world  needs  it, 
and  it  is  not  only  the  matter  of  financing  shipments,  but  it  is 
also  the  matter  of  selling  the  goods. 

You  could  buy  in  London  everything  that  was  produced 
anywhere  in  the  world,  and  you  could  sell  it  in  London.  Now 
we  have  the  problem  of  bringing  all  that  trade  to  this  country; 
not  because  we  are  going  to  snatch  it  from  London,  but  be- 
cause we  have  to  take  it.  We  have  no  choice.  The  world  needs 
a  place  to  take  care  of  it.  How  can  we  do  it,  if  you  do  not 
extend  credit  for  it?  London  did  not  give  its  money,  it  is  true. 
They  gave  the  money  of  the  other  people — like  the  banks  do 
(laughter)  ;  but  it  was  all  right,  just  the  same. 

London  received  the  contributions  of  money  and  of  products 
of  all  the  world,  and  they  distributed  them  again  for  the  service 
of  the  whole  world,  at  a  profit.  Why  can  we  not  do  the  same  ? 

London  Gave  Before  It  Took 

But  you  know  London  gave  first,  before  it  took.  London 
extended  credit  to  every  part  of  the  world.  In  exchange  for 

211 


Fourth  Session — Tuesday  Morning 


that  they  created  a  network  of  relations  and  commercial  ties 
that  are  holding  London  still,  in  spite  of  all  the  calamities  that 
have  befallen  them. 

MR.  FLEMING:  What  is  the  matter  with  New  York  being 
that  center?  (Applause.) 

MR.  GONZALES:  New  York  should  be  the  center  (applause)  ; 
but  we  have  to  do  what  London  did.  Please  tell  me  the  ex- 
porter of  silk  in  Japan  who  would  send  his  silk  to  a  manu- 
facturer in  Paterson,  New  Jersey,  with  a  bill  on  London  at 
ninety  days'  sight.  What  is  the  difference  for  him  if  it  is  a 
bill  on  New  York  at  ninety  days'  sight?  He  parts  with  his 
silk  for  ninety  days,  just  the  same.  His  receipts  are  tied  to  that 
draft  until  he  is  paid,  whether  it  is  paid  by  a  London  bank  or 
by  a  New  York  bank.  He  gets  no  more  for  it.  And,  while  we 
are  absolutely  eager  to  buy  from  everybody  at  ninety  days'  sight, 
we  want  cash.  That  is  unfair. 

I  do  not  say  that  you  have  to  extend  credit  to  everybody 
and  to  every  country.  In  the  places  where  they  are  righting 
and  where  the  people  have  been  killed  and  wounded  and  cannot 
attend  to  their  business,  how  can  you  sell  on  credit?  But,  as 
to  the  other  countries,  where  they  are  at  peace,  and  where  they 
are  trying  to  come  out  of  their  troubles — half  or  more  crippled — 
why  can  we  not  sell  them  on  credit?  Why  can  we  not  extend 
them  credit? 

You  cannot  throw  on  the  manufacturer  or  the  exporter  the 
whole  burden.  The  banks  should  do  it.  That  is  the  function 
of  the  banks,  to  discount  the  paper  on  foreign  countries,  to 
assist  the  manufacturer.  They  do  not  do  it  for  the  love  of  Mike; 
they  do  it  for  their  profit.  (Laughter.) 

Difficulty  of  Discounting  Drafts 

But  whoever  has  been  conversant  with  the  manufacturers 
in  the  export  trade  in  New  York  and  other  places  in  the  United 
States  can  tell  me  how  it  is  true  that  today  you  have  to  go  and 
beg  to  get  a  draft  discounted.  Why  should  the  bank  care  on 
what  country  the  draft  is  drawn,  or  on  whom,  so  long  as  the 
manufacturer  or  exporter  is  good?  The  buying  of  a  draft  is 
only  loaning  the  money;  and  the  man  signing  and  endorsing  it 
is  always  responsible. 

The  banks  will  say  they  have  no  connections.  Some  of  you 
have  suffered  on  account  of  collections  since  the  war  began. 

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Credit  and  the  Future  of  American  Foreign  Trade 

Before  the  war  the  banks  would  assume  responsibility  for  the 
collections  they  took  in  their  hands.  Now  they  will  not  do  it. 

If  a  bank  in  a  foreign  country  fails,  as  some  of  them  have, 
and  they  have  failed  to  remit  the  money  collected,  the  bank  here 
will  not  make  itself  responsible;  because  they  told  you,  when 
they  accepted  the  collection,  that  they  took  it  at  your  responsibil- 
ity and  at  your  risk.  How  can  you  work  that  way? 

The  uncertainty  of  these  transactions  is  worse  than  if  they 
did  not  exist;  because  you  never  know  where  you  stand.  Of 
course,  this  leads  us  to  the  point  that  you  need  American  banks 
or  branches,  or  whatever  it  may  be,  the  means  of  banking  with 
the  other  countries — not  in  the  other  countries.  That  is  entirely 
a  different  matter. 

Then,  you  know  another  point :  consumption  follows  produc- 
tion. No  country  can  buy  more  than  it  can  produce.  And  the 
majority  of  the  countries  of  the  world  have  found  themselves 
crippled  for  the  lack  of  markets.  The  European  countries,  be- 
fore selling  the  enormous  amount  of  merchandise  they  sold — 
they  bought,  first.  They  bought  the  products  of  the  whole  world. 
And  those  products,  in  large  part,  today  are  unsalable. 

It  is  not  a  matter  of  offering  the  people  of  all  the  countries 
of  the  world  fine  ports,  fine  landing  facilities,  fine  places  to  store. 
You  have  to  finance  those  shipments.  You  have  to  help  the 
people.  The  problem  is  that  you  have  to  go  and  find  out  in  every 
country  what  they  have  that  you  can  utilize. 

It  is  not  a  matter  of  going  and  finding  that  out  as  a  matter 
of  diarity.  You  find  it  out  for  your  own  profit.  Wherever 
there  is  a  coal  mine  you  can  exploit  it  at  a  profit,  for  the  develop- 
ment of  that  country  will  give  it  the  means  of  buying  more. 

Influence  of  Investments 

I  never  have  believed  that  the  investment  of  money  in  a 
country  will  drive  that  country  to  buy  from  the  country  that 
invested.  To  me,  that  has  always  been  nonsense,  because  I  have 
seen  the  results  of  it  with  my  own  eyes. 

The  foreign  enterpriser  that  goes  into  a  country  is  not 
looked  upon  with  favor.  Those  people  know  that  the  foreigner 
does  not  go  there  to  do  any  good  to  them,  but  to  do  good  to 
his  pocket ;  and  the  people  become  jealous. 

The  country  is  developed  with  the  investments,  but  the  in- 
vestor does  not  care  a  rap  whether  the  country  is  going  to  ex- 
port more  or  whether  it  is  going  to  export  less.  What  he  is 

213 


Fourth  Session — Tuesday  Morning 


after  is  the  dollars.  If  the  investment  is  good  he  will  get  the 
money  and  the  return  from  it.  If  it  is  not  good — never  mind  if 
you  tell  him  he  is  going  to  develop  trade;  he  does  not  care — 
what  he  is  after  is  the  dollars. 

The  man  who  exports  shoes  from  here  to  South  America  and 
the  man  who  exports  coffee  from  Brazil  are  different  people. 
They  do  not  meet  in  the  road. 

Of  course  with  foreign  money  these  countries  are  developed 
and  that  development  gives  them  more  means  of  buying,  and  they 
have  a  chance  to  buy;  but  they  will  buy  where  it  suits  them 
best. 

You  know  that  it  takes  the  concurrence  of  very  many  factors 
to  develop  and  improve  foreign  trade:  shipping  facilities,  bank- 
ing facilities,  credit  facilities,  transportation  facilities,  price, 
quality,  etc.;  but  nothing  is  equal  to  good  will.  (Applause.) 

When  the  people  are  prepared  not  to  do  a  thing,  they  will 
not  do  it,  and  it  is  on  that  point  that  I  appeal  to  you  gentlemen. 
I  would  like  to  speak  broadcast,  all  over  this  country  on  this 
question.  We  must  do  something.  Everybody  has  a  little  some- 
thing to  do.  Everyone  has  something  to  do,  something  to  ac- 
complish. Let  us  work  together,  for  God's  sake.  I  have  a  very 
small  part  in  this  country.  I  am  a  very  small  part  of  the  world, 
but  whatever  my  share  is,  I  do  it,  with  a  great  deal  of  pleasure. 
(Great  applause.) 

(The  full  text  of  Mr.  Gonzales'  paper  follows)  : 

Credit  and  the  Future  of  American  Foreign  Trade 

By  V.  GONZALES 

Banking  Adviser  of   the  National  Association  of    Manufacturers,   Delegate  to  Pan- 
American  Financial  Conference  and  Member  of  the  International  High  Commission. 

What  is  concerning  the  American  people  engaged  in  foreign 
trade  is  not  so  much  what  the  world  offers  today  in  the  matter 
of  opportunities  for  expansion,  but  where  and  how  our  trade 
may  stand  after  the  war  is  ended.  Fifteen  months  of  abnormal 
conditions  in  every  branch  of  international  business  have  been 
enough  to  indicate  what  trade  during  war  time  will  be.  Our 
enormous  export  figures  are  easily  understood  even  by  the  least 
keen  observers.  They  do  not  necessarily  mean  an  increase  of 
trade  but  an  extravagant  increase  of  sporadic  sales,  the  cause 
of  which  no  one  can  wish  to  see  steadily  maintained.  Our  desire 
for  trade  should  be  along  entirely  different  lines,  to  build  and  not 
to  destroy. 

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Credit  and  the  Future  of  American  Foreign  Trade 

While  no  one  can  foretell  what  will  happen  after  the  war, 
our  situation  will  be  greatly  influenced  by  what  we  do  during  the 
time  of  the  conflict. 

The  whole  world  was  thrown  into  a  chaos  when  the  war  broke 
out,  and  during  the  time  transpired  every  country  has  been  try- 
ing to  overcome  the  calamity  as  far  as  it  was  individually  con- 
cerned. Some  have  succeeded  to  a  certain  extent,  others  are  still 
struggling,  but  not  one  has  received  any  foreign  assistance.  The 
entire  credit  machinery  became  dislocated  everywhere,  and 
while  it  has  been  partially  patched  up  in  some  places  and  domestic 
economic  life  has  been  maintained  somewhat,  international  credit 
has  remained  more  or  less  crippled. 

This  country  has  perhaps  been  an  exception,  as  within  very 
few  months  it  fully  recovered  from  the  shock  and  has  since  been 
reaping  the  profits  of  an  increased  trade  that  came  unsolicited 
and  without  any  effort  on  its  part.  It  will  greatly  depend  on  the 
use  we  make  of  those  profits  to  ascertain  whether  this  apparent 
wave  of  prosperity  will  prove  to  be  a  blessing  or  a  curse. 

Piling  up  money  profits  at  the  time  that  the  entire  world  is 
suffering  may  mean  in  the  end  an  increased  amount  of  wealth  to 
the  country,  but  it  cannot  and  will  not  buy  any  good  will  nor 
make  any  lasting  connections  for  the  future  unless  it  will  help 
others  out  of  their  troubles  as  well. 

This  assistance  tendered  to  other  countries,  however 
platonically  it  may  be  looked  at,  is  only  a  business  proposition 
after  all,  and  does  not  have  to  take  the  form  of  loans  nor 
benevolent  subscriptions  to  aid  the  needy,  but  simply  and 
purely  the  affording  of  commercial  and  financial  credit  for  com- 
mercial and  financial  purposes. 

Problem  of  International  Settlement 

Among  the  many  economic  problems  confronting  every 
country  as  a  consequence  of  the  European  war  none  is  perhaps 
more  far  reaching  in  its  effects  than  the  settlement  of  international 
accounts. 

Natural  evolution  of  trade  led  to  the  establishment  of  an 
international  clearing  center  for  money,  goods  and  credit — 
London,  and  London  money,  or,  better  expressed,  London  credit 
in  the  form  of  bills  of  exchange  was  of  universal  acceptance  to 
buy,  to  sell,  to  loan  and  to  pay.  To  adjust  its  accounts  every 
country  would  look  to  a  supply  of  credit  in  London,  and  its 
domestic  financial  machinery  was  interlocked  with  London  in  a 

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Fourth  Session — Tuesday  Morning 


way  that  it  could  often  supply  its  needs  by  borrowing  credit 
there  and  would  dispose  of  its  surplus,  leaving  it  in  London. 

The  war  has  disabled  London  as  an  international  trade  center 
for  clearings,  and  until  a  temporary  or  permanent  substitute  is 
available  the  whole  world  will  have  to  suffer,  as  it  has  suffered 
during  the  last  fifteen  months. 

The  fall  in  the  purchasing  capacity  of  the  people  of  all  coun- 
tries (exception  made,  of  course,  of  the  extravagant  waste  caused 
by  the  war  in  the  warring  ones)  because  of  the  disturbance  in 
marketing  their  products  has  contracted  almost  all  human 
activities.  The  collapse  of  the  main  sources  of  international 
credit  has  reflected  so  deeply  on  local  business  everywhere  that, 
with  a  few  exceptions,  all  countries  have  their  credit  machinery 
disabled  and  all  currency  systems  have  become  unsound. 

These  adverse  elements  have  naturally  caused  the  most 
serious  derangements  in  the  course  of  exchanges  between  countries 
and  the  world  has  financially  receded  hundreds  of  years,  having 
practically  to  confine  these  exchanges  to  what  each  country  can 
dispose  of  to  the  other. 

It  is  therefore  of  the  greatest  urgency  that  a  new  clearing 
center  be  made  available  to  the  world. 

In  normal  times,  when  all  countries  were  on  an  equal  footing 
and  could  openly  compete  with  each  other,  it  was  perfectly 
admissible  that  they  should  struggle  for  the  conquest  of  the  differ- 
ent markets.  At  this  time,  when  our  competitors  are  prevented 
from  carrying  on  their  trade,  it  might  seem  a  felony  to  take 
advantage  of  their  disablement,  and  we  are  not  committing  that 
act.  We  are  not  going  after  any  of  their  customers  because  they 
cannot  serve  them,  but  because  these  must  be  served.  The  world 
at  peace  is  not  going  to  be  paralyzed  because  of  commercial 
loyalty  to  any  country,  and  it  is  suffering  enough  already  for 
reasons  for  which  it  is  not  responsible. 

We  have  done  nothing  to  make  New  York  the  substitute  for 
London  as  the  clearing  center  of  the  world.  We  have  not  even 
looked  for  it,  and  we  certainly  are  not  snatching  the  position  from 
the  former  financial  capital  of  the  world.  Furthermore,  we  can- 
not help  it.  We  owe  it  as  much  to  ourselves  as  to  the  rest  of  the 
world,  and  we  cannot  let  the  other  countries  perish  nor  lose  ourown 
trade  just  because  London  cannot  supply  credit  nor  clear  trade. 

We  would  cease  to  be  one  of  the  world's  powers  if  we  did  not 
fulfill  that  duty  now. 

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Credit  and  the  Future  oj  American  Foreign  Trade 
The  World's  Financial  Dependence  on  the  United  States 

The  task,  however,  of  taking  care  of  the  trade  and  finances 
of  the  whole  world,  which  has  befallen  this  country  so  suddenly 
and  unexpectedly,  is  beyond  its  present  ability.  It  has  changed 
overnight  from  a  financial  dependency  of  the  European  money 
markets  to  the  foremost  market  for  money.  All  countries  appeal 
to  it  and  all  want  to  be  financed  here. 

The  partial  and  temporary  disablement  of  European  in- 
dustries has  taxed  to  its  full  capacity,  or  more,  the  productive 
ability  of  American  industries,  and  we  are  expected  to  attend  to 
the  needs  of  all  countries,  producing  what  they  need  and  buying 
or  marketing  what  they  produce.  Were  our  foreign  credit 
machinery  in  readiness  we  would  be  unable  to  meet  the  world's 
wants  except  under  the  greatest  strain.  Our  inability  to  meet 
these  needs  is  causing  the  world  great  losses  and  we  are  losing  the 
advantages  and  profits  that  otherwise  would  follow. 

The  commercial  and  financial  credit  which  Europe  supplied 
unlimitedly  is  practically  suspended  for  a  period  as  indefinite  as 
the  duration  of  the  war,  and  its  revival  is  as  uncertain  as  are  the 
results  of  the  conflagration. 

We  must  create  this  supply  if  the  commercial  world  is  still  to 
progress  and  if  we  wish  to  occupy  the  position  left  vacant  by  the 
disablement  of  London. 

It  is  not  enough  that  a  few  manufacturers  and  exporters 
sell  on  credit  to  selected  customers  in  a  few  countries,  nor  that 
a  few  banks  unwillingly  discount  commercial  paper  covering 
shipments  to  some  places.  This  movement  as  it  is  being  done  will 
do  more  harm  than  good,  because  of  its  uncertainty.  It  is  indis- 
pensable that  the  supply  and  mobilization  of  credit  be  maintained 
and  be  kept  in  motion  in  a  regular  way. 

The  credit  of  the  people  in  all  countries  has  not  been  im- 
paired by  the  abnormal  conditions  prevailing.  Ante-bellum 
balances  that  could  not  be  paid  may  still  be  unpaid  and  may  or 
may  not  be  liquidated  some  time,  but  the  character  of  the  people 
is  unchanged. 

Moratoriums  •  have  greatly  embarrassed  the  collection  of 
accounts  during  this  time,  but  they  have  served  to  establish  a 
discrimination  in  favor  of  those  who  did  not  take  advantage  of  their 
provisions  and  against  those  who  did.  Under  calamitous  con- 
ditions debtors  can  appeal  to  their  creditors,  asking  for  an  exten- 
sion of  time,  without  any  reflection  on  their  character,  but  he  who 

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Fourth  Session — Tuesday  Morning 


delays  payments  simply  because  the  law  permits  him  to  do  so  is 
not  worth  trusting  again. 

The  disturbance  in  rates  of  exchange  has  also  exposed  those 
merchants  who  are  not  worthy  of  credit  under  any  circumstances. 
High  rates  of  exchange  are  never  an  excuse  for  not  paying  in  due 
time.  If  the  cost  of  goods  is  advanced  because  of  exchange  rates 
being  high,  prices  are  also  advanced,  and  the  sufferer  is  the 
public — not  the  merchant.  Lower  rates  would  not  necessarily 
induce  him  to  pay  in  advance  of  maturity. 

A  calamity  is  always  taken  into  account  by  creditors,  who 
will  not  press  their  claims  unduly,  but  this  action  should  be 
waited  rather  than  solicited  or  enforced.  Waiting  for  better 
rates  has  very  often  been  the  cause  of  heavier  losses,  and  while 
debtors  are  supposed  to  bear  the  consequences,  many  times 
creditors  have  been  the  losers  because  of  the  disablement  of  the 
former. 

Those  who  were  honest  before  the  war  have  paid  their 
accounts  and  will  continue  to  pay,  no  matter  what  happens,  and 
if  they  incur  obligations  they  will  meet  them.  If  conditions  are 
such  that  they  doubt  their  ability  to  pay,  they  will  not  buy,  but 
if  they  buy  they  will  pay  just  the  same  as  they  paid  before  the 
war.  But  the  machinery  for  liquidating  credit  at  home  and 
especially  for  transferring  it  abroad  has  collapsed  in  almost  every 
country,  and  it  is  not  so  much  a  matter  of  trusting  the  people 
with  the  value  of  accounts  as  of  mobilizing  these  accounts  and 
actually  liquidating  them  here  in  due  time. 

Increased  Exports  Not  Due  to  American  Initiative 

No  organized  or  coordinated  movement  in  this  direction 
has  taken  place,  and  if  we  see  the  figures  of  our  exports  continually 
climbing  it  is  not  due  to  any  efforts  of  ours  but  to  the  unfortunate 
demand  for  arms  and  munitions  of  war  to  destroy  and  for  food- 
stuffs and  other  products  to  nourish,  clothe  and  equip  those  using 
these  elements  of  destruction. 

Even  this  buying  movement  is  liable  to  decrease  or  even 
collapse  because  the  buyers  have  no  convenient  means  of  settling 
their  accounts  for  these  purchases.  It  has  been  found  desirable 
or  necessary  to  draw  on  the  American  people's  savings,  inviting 
them  to  loan  money  to  belligerent  countries  in  order  that  they 
may  still  buy.  How  far  this  can  go  no  one  knows,  but  should 
the  American  public  fail  to  find  interest  in  this  class  of  investment 
and  the  banks  and  bankers  underwriting  the  bonds  have  to  carry 

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Credit  and  the  Future  of  American  Foreign  Trade 

them  themselves,  it  is  hardly  believable  that  such  transactions 
would  be  made  again  and  the  prospects  of  maintaining  these 
abnormal  figures  would  disappear. 

A  strong  appeal  has  been  made  to  the  American  people, 
pleading  for  the  cause  of  the  labor  of  the  country  as  if  in  danger 
of  suffering,  and  a  loan  for  two  governments  at  war  has  been 
floated,  the  underwriters  assuring  the  people  that  the  paper  they 
offered  was  good.  If  the  credit  of  the  governments  at  war  is 
good  is  not  the  credit  of  honest  merchants  in  countries  at  peace 
much  better  ? 

We  may  hav  e  room  for  all.  Our  present  financial  machinery 
is  equipped  in  a  way  that  we  can  make  money  as  plentiful  as  is 
necessary,  and  if  we  feel  that  to  sell  we  must  loan,  why  loan  only 
to  governments  at  war? 

This  is  not  an  appeal  to  extend  credit  to  all  everywhere. 
It  is  simply  establishing  the  premises  for  a  few  remarks  on  what 
we  should  do  now  in  order  that  after  the  war  our  efforts  shall  not 
have  been  wasted  and  that  we  may  win  the  trade  by  giving  in  time 
what  we  could  give.  The  unlimited  amount  of  credit  we  have  is 
of  no  use  to  us  if  we  do  not  utilize  it. 

The  Loans  to  Belligerents 

All  our  efforts  to  arouse  the  interest  of  the  people  in  the  rest 
of  the  world  have  been  confined  to  what  each  one  has  been  able 
to  do  for  himself. 

The  only  event  worth  mentioning  has  been  the  placing  of 
a  large  loan  for  two  of  the  belligerent  nations,  to  which  investors 
have  been  asked  to  subscribe  as  a  patriotic  act  in  trying  to  sus- 
tain the  industries  of  the  country. 

The  same  reasons  offered  in  support  of  the  loan  apply  with 
greater  force  to  countries  at  peace,  and  for  peaceful  purposes,  and 
while  it  may  be  a  very  good  investment  to  lend  money  to  two  of 
the  formerly  most  powerful  governments  of  the  world,  it  certainly 
is  much  safer  to  extend  credit  to  merchants  all  over  the  same 
world.  They  do  not  use  the  goods  bought  on  credit  to  destroy, 
but  to  maintain,  and  their  combined  liability  at  large  is  of  much 
better  value  than  the  promises  to  pay  of  governments  in  a  state 
of  war. 

Credit   and   the   Manufacturers'    and   the   Banks'    Relation   Thereto 

As  a  rule,  manufacturers  and  exporters  are  quite  willing 
to  sell  on  credit  provided  they  can  turn  over  the  accounts  and 

219 


Fourth  Session — Tuesday  Morning 


have  a  reasonable  assurance  that  they  can  be  protected  in  a  way 
better  than  to  be  at  the  mercy  of  events. 

Turning  over  the  accounts  means  the  discounting  of  bills 
by  banks,  and  while  this  was  done  fairly  liberally  before  the  war, 
at  this  time  it  is  a  matter  of  begging,  and  most  uncertain ;  and  still 
discounting  a  bill  drawn  by  a  manufacturer,  no  matter  on  what 
country,  is  a  much  better  risk  for  any  bank  than  buying  or  lending 
money  on  bonds  issued  by  a  foreign  government  at  war,  however 
powerful  that  government  has  been.  The  manufacturer's 
liability  which  is  retained  on  discounting  his  paper  is  a  more 
desirable  guarantee  than  the  contingent  marketability  of  a  bond 
of  any  class. 

It  has  been  authoritatively  stated  that  about  95  per  cent,  of 
the  world's  trade  was  carried  on  credit  all  the  way  from  the  sight 
draft  against  bill  of  lading  to  open  accounts  and  acceptances 
running  for  as  long  as  six  or  more  months.  Our  largest  and  most 
powerful  competitors,  England,  France  and  Germany,  extended 
credit  very  liberally  and  they  unquestionably  had  that  great  ad- 
vantage over  us.  But  British,  French  and  German  manufac- 
turers had  the  facility  that  we  have  not  as  yet,  notwithstanding 
the  latest  improvements  in  our  financial  machinery;  they  could 
turn  over  their  foreign  accounts,  no  matter  how  long  they  ran, 
by  securing  advances  at  reasonable  rates  of  interest  from  their 
banks.  The  financial  structure  of  the  United  States  did  not  pro- 
vide for  the  carrying  of  long  time  accounts,  nor  for  the  mobiliza- 
tion of  credit  granted  to  foreign  countries  except  to  a  very  few 
and  under  the  most  restricted  conditions. 

Then  came  the  war  and  we  found  ourselves  called  upon  to 
supply  the  world  with  the  goods  that  could  not  be  supplied  by 
warring  Europe,  but  with  a  clamor  for  credit  from  all  quarters. 

Crippled  as  almost  all  countries  became,  because  of  the 
partial  or  total  unmarketability  of  their  products  and  the  sus- 
pension of  the  flow  of  credit  and  investments  from  abroad,  they 
could  still  buy  something,  and  as  and  when  they  have  improved 
their  conditions  and  have  been  able  to  recover  somewhat  their 
foreign  purchasing  capacity  they  have  been  calling  for  more  and 
more  goods.  The  diversion  of  the  European  industries  to  the 
manufacture  of  deadly  weapons,  the  disablement  of  the  financial 
machinery  available  for  foreign  trade  of  the  countries  at  war,  and 
even  the  call  to  the  front  of  most  of  their  ablest  business  men,  has 
caused  a  quasi-paralyzation  of  their  export  trade,  leaving  the 
world  in  our  hands  and  at  our  mercy. 

220 


Credit  and  the  Future  of  American  Foreign  Trade 

What  have  we  done  to  take  care  of  that  world  thus  thrown 
to  us  ?  With  a  few  exceptions,  we  have  enforced  the  most  rigid 
conditions  of  payment — cash  in  New  York  against  shipping 
papers  when  not  a  flat  and  unwelcome  demand  for  money  in  ad- 
vance. In  some  cases  our  conditions  have  been  complied  with, 
and  in  some  lines  exports  show  what  might  be  called  an  encourag- 
ing advance.  But  this,  while  it  has  brought  us  the  money  and 
our  coffers  are  quoted  as  being  nearly  congested,  has  made  no 
friends  for  us.  Many  foreign  customers  who  have  had  to  con- 
form with  our  exigencies  have  gone  home  with  vengeance  in  their 
hearts  and  determined  to  go  back  to  Europe  as  soon  as  Europe  is 
on  its  feet  again.  We  have  been  reinforcing  the  future  trade  of 
Europe  against  our  own  while  we  have  been  deceiving  ourselves 
with  swollen  figures  of  the  present. 

Credit  Before  the  War 

It  might  not  be  advisable  to  extend  credit  for  so  long  a  time 
as  was  granted  at  the  time  of  the  outbreak  of  the  war.  In  fact, 
this  was  more  a  prostitution  of  trade  than  a  legitimate  en- 
couragement for  expansion,  and  it  was  a  result  of  the  keen  com- 
petition raging  between  all  the  industrial  countries. 

When  prices  reached  the  bottom  level  and  competition  could 
no  more  be  figured  on  the  cost  of  goods,  manufacturers  and  ex- 
porters adopted  the  system  of  selling  "time,"  which  they  could 
buy  cheap  at  home.  This  system  was  eminently  pernicious,  as  it 
created  an  artificial  trade  which  could  not  always  liquidate  itself 
without  the  most  injurious  losses.  Merchants  buying  far  in 
excess  of  their  selling  capacity  would  unload  on  the  public  on  the 
most  extravagant  terms  of  credit,  and  it  is  enough  to  look  over 
the  books  of  bankrupt  firms  in  all  foreign  countries  to  ascertain 
the  large  proportion  of  uncollectible  accounts  representing  goods 
consumed  which  were  never  paid  for. 

The  Argument  for  Reasonable  Credit 

But  between  this  absurd  system  of  credit  and  our  demand 
for  cash  there  is  an  intermediate  course  to  be  taken,  which  is  a 
reasonable  time  of,  say,  not  less  than  90  days  and  not  more  than 
six  months,  that  can  be  granted  to  reliable  merchants  in  all 
countries. 

There  are  almost  everywhere  three  classes  of  importers: 
the  wholesalers,  who  import  goods  to  sell  to  retail  merchants;  the 
retail  importers,  who  import  to  sell  direct  to  consumers;  and  the 

221 


Fourth  Session — Tuesday  Morning 


consumers  themselves,  who  import  goods  for  their  own  use  on  a 
small  scale,  or  for  the  establishment  or  operation  of  public  works 
or  industries. 

Except  in  the  case  of  machinery  or  equipment,  when  an  enter- 
prise may  need  the  assistance  of  foreign  capital  in  the  form  of  a 
reasonably  long  investment,  all  others  do  not  need,  as  a  rule,  credit 
for  more  than  90  days  after  the  goods  have  arrived  at  destination. 

In  some  cases  bad  customs  management  or  bad  landing  serv- 
ice will  delay  the  clearance  of  goods  for  days,  weeks  or  perhaps 
one  month  or  more,  but  this  is  something  which  can  be  remedied 
and  should  be  remedied  by  local  efforts,  but  not  at  the  expense  of 
foreign  creditors. 

Consumers  not  buying  machinery  or  supplies  for  public 
works,  have  no  right  to  demand  credit.  They  apparently  save 
money  when  importing  goods  for  which  they  would  pay  cash  at 
local  stores,  and  while  they  might  not  be  asked  to  remit  in 
advance,  which  means  perhaps  parting  with  their  money  for  60 
days  or  more  before  they  actually  receive  the  goods,  they  should 
at  least  pay  cash  on  receipt  of  shipping  papers.  Retail  importers 
are  entitled  to  credit  for  an  average  of  90  days.  They  have  to 
pay  cash  for  duties  and  other  expenses  and  must  carry  stocks 
awaiting  buyers.  They  sell  largely  for  cash,  domestic  credit  to 
consumers  not  extending  over  30  days  as  a  rule.  Within  90  days 
of  arrival  of  goods  they  have  ample  time  to  receive  funds  enough 
to  pay  for  their  foreign  purchases.  Wholesale  importers  also 
need  credit  for  at  least  90  days.  They  also  have  to  pay  for  duties 
and  expenses  in  cash,  and  if  it  is  true  that  they  sell  on  credit  to 
retail  merchants,  these,  as  a  rule,  sign  notes  for  their  purchases 
and  these  notes  are  discounted  by  local  banks,  affording  funds  to 
pay  for  foreign  accounts. 

Both  wholesale  and  retail  importers  should  have  adequate 
capital  to  carry  on  their  trade,  but  should  they  limit  their  business 
to  only  what  they  could  turn  over  with  their  capital  alone,  their 
business  would  be  limited  to  perhaps  one-tenth  of  what  it  is. 
Profits  on  commercial  enterprises  would  have  to  be  too  big  to  pay 
expenses  and  reasonable  earnings  on  the  capital  itself  and  the  cost 
of  goods  would  be  greatly  increased.  This  cost  is  lowered  by 
taxing  goods  with  only  reasonable  interest  on  their  value. 

Credit  in  Place  of  Capital 

The  amount  of  capital  available  for  merchandising  is  a 
great  deal  smaller  in  other  countries  than  it  is  in  the  United 

222 


Credit  and  the  Future  of  American  Foreign  Trade 

States ;  credit  facilities  are  not  so  extended  nor  so  easily  obtained, 
and  this  obliges  merchants  to  seek  for  more  credit  and  for  more 
time  than  is  usually  granted  in  this  country.  Then,  the  carriage 
of  goods  demands  more  time  than  is  required  in  this  country, 
where  transportation  is  so  frequent  and  easy,  and  this  requires  the 
carrying  of  much  larger  stocks.  Within  the  week  stocks  can  be 
replaced  in  any  part  of  the  United  States  where  there  is  no  delay 
other  than  the  actual  time  necessary  for  transportation.  Fac- 
tories in  the  East  can  place  goods  in  San  Francisco  if  necessary 
within  six  days  after  the  order  is  received,  while  to  a  place 
like  Buenos  Aires  or  Cape  Town  it  takes  about  one  month 
of  sailing  time,  not  considering  that  there  are  no  steamers 
leaving  every  day  nor  several  times  a  day  as  happens  with 
our  railways. 

This  means,  of  course,  that  foreign  merchants  must  carry 
stock  five  or  six  times  larger  than  our  merchants.  If  they  could 
not  secure  credit  they  would  have  to  invest  a  larger  capital  or 
limit  their  trade  to  their  actual  cash  means. 


Comparison  of  Domestic  and  Foreign  Risks 

It  is  often  said  that  credit  is  safer  when  extended  in  this 
country  than  when  extended  to  customers  abroad.  No  bigger 
mistake  can  be  made.  Credit  granted  to  honest  and  reliable 
merchants  in  any  country  is  just  as  safe  as  that  granted  to  an 
equally  honest  and  reliable  concern  within  this  city,  county, 
State  or  the  Union. 

The  fact  that  a  man  is  nearer  does  not  make  him  any  better, 
nor  does  it  make  him  worse  because  he  is  at  a  greater  distance. 

The  one  who  will  pay  is  just  as  near  in  Buenos  Aires  or 
Calcutta  as  at  426.  Street,  New  York  City,  and  the  one  who  will 
not  pay  is  just  as  far  from  New  York  in  Jersey  City  as  if  he  were 
in  Afghanistan. 

Similarity  of  language  and  recourse  to  law  are  futile  reasons, 
for  it  does  not  imply  that  a  man  must  speak  English  to  be  honest, 
and  the  law  is  no  more  effective  here  against  a  man  who  will  not 
pay  than  it  is  in  any  other  part  of  the  world.  Business  made  safe 
by  recourse  to  law  is  not  the  one  worth  looking  for. 

Distance  counts  because  it  means  time,  but  time  is  paid  for 
in  the  shape  of  interest  charged  directly  as  an  item  on  an  account, 
as  a  part  of  the  price  or,  as  is  often  done,  in  the  rate  of  conversion 
to  foreign  money. 

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Fourth  Session — Tuesday  Morning 


A  manufacturer  selling  to  a  domestic  customer  on  ninety 
days'  credit  may  not  get  his  money  any  sooner  than  on  a  sale  at 
thirty  days'  acceptance  on  Buenos  Aires,  there  being  needed 
thirty  additional  days  each  way  for  a  letter  to  reach  destination 
and  for  the  remittance  to  reach  home.  Of  course,  if  a  sale  is  made 
to  a  man  in  Buenos  Aires  at  ninety  days'  acceptance,  it  will 
actually  require  five  months  for  the  remittance  to  be  received,  or 
sixty  days  more  (time  distance)  than  a  ninety-day  domestic  sale, 
but  the  sixty  additional  days  are  paid  for,  meaning  perhaps  one 
per  cent,  or  more  added  to  the  price. 

The  Banks  and  Commercial  Paper 

It  is  easier  for  a  manufacturer  to  turn  over  the  value  of  his 
domestic  sales  than  it  is  to  dispose  of  his  foreign  accounts. 
Many  banks  prefer  to  loan  money  to  their  customers  on  their  own 
single  name  paper  than  to  buy  (or  advance  money  on)  drafts 
drawn  on  foreign  countries ;  something  which  is  inexplicable,  the 
liability  being  the  same.  But  if  one  bank  does  not  do  it  others 
will,  and  it  is  only  a  matter  of  making  proper  connections  to 
secure  the  needed  accommodation.  Manufacturers  who  cannot 
secure  this  and  who  cannot  carry  accounts  should  not  waste 
their  time  in  trying  to  do  an  export  business.  Manufacturers 
who  cannot  secure  bank  accommodation  to  turnover  their  domes- 
tic trade  run  out  of  business  pretty  quickly  also,  as  it  is  illogical 
and  unbusinesslike,  when  not  impracticable,  to  do  a  strictly 
cash  trade  for  buying  and  selling. 

Selling  to  commission  houses  for  export  is  not  exporting: 
it  is  only  adding  one  more  domestic  customer,  more  exigent  per- 
haps in  regard  to  price,  packing  and  other  details. 

Discounts  and  Credits 

The  granting  of  large  discounts  to  secure  cash  for  domestic 
or  foreign  business  is  not  a  solution  of  the  problem  unless  a 
monopoly  is  held  of  some  article  and  buyers  must  submit  to  any 
imposition.  But  in  this  case  large  discounts  are  unnecessary, 
as  whoever  has  the  power  to  enforce  himself  on  the  public,  does 
not  need  to  yield  in  price  or  terms  of  payment. 

Those  discounts,  or,  as  they  are  called  sometimes,  ' 'induce- 
ments," to  secure  "cash,"  avoiding  the  trouble  of  having  to 
finance  accounts  and  the  credit  risk  represent  not  so  much  a  high 
rate  of  interest  for  money  as  a  high  rate  of  insurance.  It  cannot 

224 


Credit  and  the  Future  of  American  Foreign  Trade 

be  said  that  the  manufacturer  actually  needs  cash  so  much.     He 
can  secure  it  by  borrowing  from  his  bank. 

As  a  rule,  these  discounts  do  not  reach  in  full  the  foreign 
buyer.  Some  part  remains  in  the  channels  of  trade,  and  it  can- 
not be  said  that  he  who  retains  it  is  not,  in  a  certain  way,  entitled 
to  a  compensation  for  assuming  the  risk,  but  many  times  this 
item,  which  may  be  called  "credit  insurance,"  adds  to  the  price 
and  stands  in  the  way  of  competition.  Sometimes  the  difference 
between  the  price  paid  by  the  buyer  and  the  one  actually  received 
by  the  manufacturer  is  so  large  that  the  trade  becomes  practically 
impossible. 

Time  and  Credit 

In  this  regard  it  is  well  to  have  in  mind  that  "time"  and 
"credit"  are  two  different  things,  although  under  either  condition 
the  manufacturer  is  delayed  in  receiving  his  money.  A  sale  made 
for  cash  against  documents  at  destination  (usually  sight  draft 
drawn  with  bill  of  lading  attached),  to  a  merchant  in,  say,  Cape 
Town,  is  not  liquidated  before  sixty  days  after  shipment  is  made, 
as  it  takes  about  thirty  days  for  the  draft  to  reach  destination  and 
thirty  days  for  the  mail  with  the  remittance  to  reach  home. 
But  the  merchant  in  Cape  Town  is  granted  no  credit.  Further- 
more, on  paying  his  draft  against  the  surrender  of  the  bill  of  lading 
he  extends  credit  to  the  manufacturer,  giving  his  money  for  a  piece 
of  paper  representing  the  goods,  which  he  cannot  verify  until  a 
few  days  later  when  he  has  been  able  to  open  the  packages  and 
get  full  possession  of  their  contents.  In  this  particular  case  he  is 
not  even  granted  time,  as  he  must  pay  his  bill  on  demand. 

The  manufacturer,  however,  is  delayed  sixty  days.  He  can 
charge  interest  for  this  time  either  directly  or  in  the  price,  and  if 
he  wishes  to  secure  cash  he  probably  can  discount  the  draft  at 
a  bank,  ceding  the  interest  charged. 

When  goods  are  sold  on  "d/p  draft  terms"  (documents  to 
be  delivered  only  against  payment) ,  the  buyer  is  not  granted  any 
credit,  either,  as  he  cannot  obtain  possession  of  the  shipping 
papers  until  he  pays.  This  form  of  payment  is  a  great  conven- 
ience to  buyers,  as  goods  are  placed  at  their  disposal  at  their 
place  of  business,  and  as  their  obligation  is  extended  for  the  time 
of  the  draft,  usually  ninety  days,  they  can,  as  a  rule,  dispose  of 
the  goods  in  part,  at  their  own  convenience,  paying  for  them  as 
they  take  possession  of  them.  The  manufacturer  grants  "time," 
but  not  "credit."  His  bill  is  specifically  secured  by  the  goods 
although  the  sale  is  made,  the  only  risk  involved  being,  as  in 

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Fourth  Session — Tuesday  Morning 


sight  drafts  against  bill  of  lading,  the  refusal  of  the  buyer  to  take 
over  the  goods,  something  that  no  honest  and  reliable  merchant 
will  do  without  full  reason  or  an  accident  happening  to  him 
(death,  etc.),  which  prevents  the  transaction  from  being 
consummated.  The  risk  is,  therefore,  confined  to  expenses  of 
forwarding  the  goods  and  their  return. 

Credit  granted  may  not  necessarily  mean  time,  as  time  is 
considered  in  trade.  Twenty-four  hours  allowed  for  a  bill  to  be 
paid  is  just  as  much  credit  as  ninety  days,  as  far  as  risk  is  con- 
cerned. A  bill  at  twenty-four  hours,  or  as  it  is  usual  to  grant  in 
this  country,  "cash  ten  days,1'  involves  as  much  danger  of  losing 
the  money,  if  the  buyer  will  not  or  cannot  pay,  as  if  it  was  at 
ninety  days. 

The  Confirmed  Bank  Credit 

It  has  been  suggested  that  foreign  buyers  provide  confirmed 
bank  credits  to  pay  for  purchases  against  delivery  of  shipping 
papers  at  the  port  of  shipment. 

With  the  exception  of  institutions  in  the  former  money 
markets  of  the  world,  London,  Paris,  Hamburg,  etc.,  banks  could 
not  easily  issue  letters  of  credit,  unless  they  were  prepared  to  have 
the  amount  charged  against  their  accounts  at  once.  A  bank,  say 
in  Bolivia,  which  would  instruct  its  New  York  correspondent  to 
pay  for  its  account  up  to  a  certain  amount  against  shipping  papers 
for  one  or  more  of  its  clients,  could  not  expect  the  said  correspon- 
dent to  do  other  than  charge  to  its  account  the  amount  in  question 
the  day  the  sellers  were  notified  (confirmed  credit)  that  they 
were  prepared  to  pay,  and  this  is  exactly  equivalent  for  the 
Bolivian  bank  to  have  drawn  its  own  draft  against  its  corre- 
spondent. To  draw  a  draft  or,  its  equivalent,  to  open  a  credit 
to  be  confirmed,  the  Bolivian  bank  would  require  its  customer 
to  pay  the  value,  and  while  such  customer  would  be  better  pro- 
tected (not  paying  in  advance  but  on  receipt  of  shipping  papers, 
which  is  theoretical  delivery) ,  he  would  part  with  his  money  just 
the  same,  many  days,  weeks  or  months,  perhaps,  before  he  could 
see  the  goods  purchased. 

It  has  also  been  suggested  that  local  banks  in  foreign  countries 
which  usually  lend  money  to  their  domestic  clients  at  the  time 
they  need  to  pay  for  foreign  purchases,  advance  the  time  of  their 
loans  and  supply  the  money  on  arrival  of  goods  instead  of  at  the 
maturity  of  time  drafts  drawn  against  such  clients,  thus  permit- 
ting them  to  pay  cash. 

This  did  not  seem  feasible  before  the  war,  when  credit  was 

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Credit  and  the  Future  of  American  Foreign  Trade 

ample  and  abundant,  and  when  banks  could  utilize  an  unlimited 
supply  in  London.  Therefore,  now  it  would  not  appear  to  be  the 
proper  time  to  propose  it. 

Credit  and  Local  Interest  Rates 

Local  rates  of  interest  have  been  as  a  rule  much  above  our 
foreign  trade  standard  rate — 6  per  cent,  per  annum.  At  certain 
places  it  is  now  18  per  cent.,  and  any  added  cost  of  the  goods  to 
the  buyer  would  make  him  raise  his  prices.  In  normal  times  the 
added  cost  would  be  a  point  against  us  in  competition  with  other 
foreign  goods. 

In  very  few  countries  could  banks  lend  their  credit,  even  if 
authorized  by  law,  as  the  Federal  Reserve  Act  has  done  for  our 
national  banks.  The  commercial  value  of  an  acceptance  does  not 
depend  alone  on  its  guarantee.  It  must  also  be  negotiable,  and  it 
is  not  very  probable  that  a  draft  accepted,  say  by  a  bank  in 
Batavia,  Java,  would  be  more  acceptable  for  discount  here  than 
an  acceptance  of  a  firm  in  the  same  city  stronger  than  the  bank 
itself.  Any  bank's  resources  may  mean  greater  power  and  greater 
actual  means  in  the  shape  of  liquid  capital,  but  a  merchant  owning 
more  unincumbered  property  than  the  bank's  net  capital  would 
be  much  better  and  much  safer.  Then,  banks  here  look  more  to 
the  value  of  the  drawer,  than  to  that  of  the  drawee. 

Suppose  that  banks  in  financially  dependent  countries  (all 
those  other  than  the  money  centers),  would  issue  letters  of 
credit  for  manufacturers  to  draw  against  them  for  shipment  to 
their  clients:  where  would  the  manufacturer  be  more  protected? 
His  liability  would  be  the  same  if  the  accepting  bank  did  not  pay, 
and  he  would  be  in  the  same  position  as  if  his  customer  did  not 
meet  his  obligations  in  time. 

The  acceptances  of  such  banks  would  find  a  market  here  to 
a  certain  extent,  but  not  perhaps  as  ample  as  drafts  drawn 
against  several  merchants,  meaning  the  splitting  of  risks.  The 
manufacturer  would  always  hold  his  customer  responsible  until 
the  draft  drawn  against  the  bank  issuing  the  letter  of  credit  was 
actually  paid,  and  unless  such  drafts  were  more  negotiable  and 
represented  better  guarantee,  their  interference  would  be  entirely 
useless. 

To  whom  would  an  American  bank  send  for  collection  a 
draft  drawn  against  a  bank  issuing  such  letter  of  credit  if  there 
was  no  other  bank  in  that  city  or  in  the  country  ?  If  there  were 
several  banks  and  all  should  issue  letters  of  credit,  they  would  all 

227 


Fourth  Session — Tuesday  Morning 


be  receiving  drafts  against  each  other,  creating  perhaps  friction, 
confusion  and  an  undesirable  offsetting  of  liabilities  between  them. 
The  plan  might  work  in  certain  places,  especially  where 
there  were  agencies  or  branches  of  American  banks,  so  long  as 
these  did  not  go  into  the  same  business  and  issue  letters  of  credit 
also. 

The  Task  of  Banks 

If  the  burden  of  carrying  foreign  accounts  is  thrown  entirely 
on  manufacturers  or  exporters  they  cannot  go  beyond  their  own 
means,  and  trade  would  be  greatly  embarrassed.  That  is  the 
task  of  banks,  and  they  can  do  it  at  a  profit  as  they  have  always 
done  it.  There  is  no  reason  on  earth  why  they  should  loan  prac- 
tically unlimitedly  on  manufacturers'  own  paper  and  not  discount 
their  foreign  bills,  which  after  all  is  only  loaning  money  against 
the  assignment  of  specific  accounts  as  guarantee. 

The  excuse  has  been  that  our  banks  have  no  suitable  con- 
nections everywhere  to  protect  collections  in  foreign  countries, 
and  it  is  only  in  the  few  branches  of  one  or  two  American  banks 
that  such  collections  can  be  made  within  their  own  premises. 
This  only  emphasizes  the  need  for  American  banks  or  branches  of 
them  in  all  countries,  but  it  is  yet  to  be  seen  that  the  mere  col- 
lection of  accounts  will  be  enough  to  encourage  American  banks 
to  go  into  the  venture. 

If  all  American  manufacturers  engaged  or  were  willing  to 
engage  in  foreign  trade  and  all  exporters  were  willing  to  extend 
credit  as  they  will  have  to  do  if  we  are  to  build  a  trade  for  the 
future,  they  simply  could  not  do  it  unless  they  were  assisted  by 
proper  banking  facilities. 

These  facilities  today  are  absolutely  inadequate,  and  if  the 
banking  interests  of  the  country  are  not  going  to  provide  them 
or  if  they  are  going  to  discuss  the  subject  for  some  years  more, 
manufacturers  and  exporters  will  have  to  take  the  matter  in  hand 
themselves.  Otherwise  they  will  have  to  suffer  the  consequences. 
Post-bellum  prospects  are  such  that  it  is  no  longer  a  matter  for 
discussion  but  of  acting  and  acting  promptly. 

It  would  be  much  better  no  doubt  that  banking  business 
and  the  services  attached  in  taking  care  of  foreign  accounts 
should  be  left  in  the  hands  of  bankers,  if  they  can  and  will  do  it 
properly.  But  it  is  enough  to  see  what  has  been  accomplished 
during  the  last  fifteen  months,  and  to  observe  the  present  stage 
of  the  matter  to  judge  of  the  hopelessness  of  the  case.  While 
much  has  been  spoken  and  written  about  the  need  of  American 

228 


Credit  and  the  Future  of  American  Foreign  Trade 

banking  abroad,  the  results  are  confined  to  the  few  branches  in 
three  countries  of  South  America,  one  in  the  West  Indies  and  two 
of  smaller  importance  in  Central  America,  in  addition  to  one  other 
bank  branched  out  in  the  Far  East;  but  there  is  nothing  under 
way  that  may  lead  us  to  believe  that  at  any  but  a  very  remote 
time  we  may  expect  the  establishment  of  a  system  covering  the 
whole  world,  and  nothing  less  than  this  is  what  is  needed. 

Will  any  of  the  American  banks,  or  several  of  them,  branch 
out  all  over  the  world  if  the  only  expectations  are  to  attend  and 
take  care  of  the  interests  of  American  foreign  trade  ?  Will  they 
venture  into  banking  at  this  time  in  many  countries  which 
might  or  might  not  be  the  real  sources  of  profits  when  what  our 
foreign  trade  needs  is  only  banking  with  these  countries,  which  is 
much  less  profitable  ? 

Not  a  Question  for  Bankers  Only 

This  is  not  a  question  to  be  resolved  by  bankers  alone. 
Manufacturers  and  exporters  cannot  wait  until  it  suits  the  banks 
to  extend  the  facilities  and  services  they  need,  and  only  where  it  is 
suitable,  convenient  and  profitable  for  the  banks  to  do  so.  They 
need  the  facilities  and  the  service,  and  if  bankers  cannot  or  will 
not  afford  them  they  must  find  their  way  to  do  the  business  with- 
out them. 

The  opportunity  to  extend  American  trade  to  the  most 
remote  parts  of  the  world  will  not  present  itself  again,  and  what 
we  will  not  or  can  not  do  now,  we  shall  not  be  able  to  do  at  any 
time  in  the  near  future. 

During  the  first  few  years  after  the  war  there  will  probably 
be  a  great  demand  for  capital  and  energies  in  Europe  to  rebuild 
all  that  is  being  destroyed  now.  Business  then,  in  this  line,  may 
be  so  strenuous  that  our  ablest  and  most  powerful  men  may  be 
devoted  to  a  bigger  task,  neglecting  the  troublesome  details  of 
questions  of  minor  importance,  and  it  may  happen  that,  all  things 
being  reversed,  Europe  will  do  with  the  assistance  of  our  money 
what  we  did  at  other  times  with  the  assistance  of  its  money — 
build  foreign  trade. 

Time  for  United  Effort 

It  is  the  time  to  unite  efforts  rather  than  to  oppose  each 
other  in  trying  to  "control"  or  to  make  more  out  of  certain  lines 
or  kinds  of  business.  We  have  lost  already  fifteen  months,  and  if 
we  look  at  the  face  of  things  we  shall  discover  that  we  can  show 
nothing  more  than  a  mass  of  scattered  information  and  many 

229 


Fourth  Session — Tuesday  Morning 


schemes  in  process  of  public  digestion.  To  know  how  foreign 
customers  feel,  it  is  enough  to  hear  people  from  all  countries 
talk  when  they  arrive  at  home  disappointed  and  read  letters  of 
those  who  have  not  come.  Criticisms  from  consular  officers  add 
to  this  material  evidence,  and  then  each  one  who  has  had  business 
before,  or  who  has  attempted  academically  to  go  into  the  foreign 
trade  now,  or  who  has  been  approached  by  foreign  buyers,  can 
find  out  for  himself  if  the  fifteen  months  have  assured  him  of  any 
prospects  for  after  the  war. 

Assuming  that  in  one  way  or  the  other  proper  and  ample 
banking  facilities  were  afforded  to  manufacturers  and  exporters, 
and  that  they  were  placed  in  a  position  to  extend  unreserved 
commercial  credit,  feeling  assured  that  their  interests  were  looked 
after  in  foreign  countries,  all  this  would  still  be  insufficient  as  far 
as  expanding  and  retaining  foreign  business  is  concerned. 

Consumption  Follows  Production 

It  must  be  borne  in  mind  that  consumption  follows  pro- 
duction and  that  no  country  can  buy  beyond  its  purchasing 
capacity  arising  from  the  marketing  of  its  products. 

We  were  and  still  are  the  largest  individual  consumers  of 
almost  every  product  of  other  countries,  because  our  population 
is  the  largest  national  consumer,  but  we  were  not  the  only  con- 
sumers. Other  countries  combined,  especially  those  engaged  in 
the  war,  were  the  largest  buyers,  if  not  direct  consumers,  of  such 
products;  and  their  buying  and  consuming  capacity  has  ceased 
or  greatly  fallen,  except  in  a  few  lines.  Marketing  of  products, 
even  for  our  consumption,  was  largely  carried  on  in  London, 
Paris,  Hamburg  or  some  other  of  the  markets  practically  closed 
today,  and  the  distribution  of  products  which  formerly  took  place 
there  has  been  greatly  disturbed.  We  are  now  supposed  to  be  this 
distributing  center,  temporarily  or  permanently,  and  this  does 
not  mean  that  we  should  only  afford  port  facilities  to  trans-ship 
or  to  store  goods  for  further  disposal,  but  also  that  we  should 
finance  or  assist  in  financing  those  shipments.  To  this  end  we 
must  have  ample  banking  facilities  to  offer  to  all  countries. 

Limitations  of  the  Federal  Reserve  Act 

The  power  of  accepting  drafts  given  to  national  banks  by  the 
Federal  Reserve  Act  while  improving  conditions  for  ourselves, 
to  finance  at  our  convenience  our  imports  and  our  exports,  does 
not  necessarily  place  at  the  disposal  of  foreign  countries  any 
further  facilities  or  conveniences.  The  silk  manufacturer  who, 

230 


Credit  and  the  Future  of  American  Foreign  Trade 

to  import  his  raw  products  from  Japan,  is  offered  the  facility  of 
sending  to  his  correspondent  a  letter  of  credit  on  New  York 
instead  of  one  on  London,  is  giving  no  facilities  to  the  Japanese 
exporter,  but  retaining  them  himself.  The  Japanese  exporter 
will  part  with  his  goods  just  as  he  parted  before,  having  his 
liability  attached  until  the  draft  drawn  against  the  letter  of 
credit  is  ultimately  paid — whether  this  draft  is  drawn  in  dollars 
on  New  York  or  in  pounds  sterling  on  London.  The  only  one 
benefited  is  the  American  buyer,  who  is  allowed  ninety  days  to 
pay,  and  the  acceptance  of  a  draft  by  a  bank  instead  of  by  the 
importer  may  be  a  better  guarantee  for  the  drawer  sometimes. 
The  bill  may  also  be  more  negotiable,  and  might  perhaps  obtain 
a  better  rate  of  exchange  if  accepted  by  a  bank.  But  the  real 
convenience  is  not  afforded  to  the  exporter  of  silk  in  Japan,  who 
would  much  rather  get  cash,  without  liability  attached,  for  his 
goods,  than  an  advance  of  money  from  his  bank  against  his 
shipping  papers  and  under  his  responsibility. 

Of  course,  American  banks,  being  able  to  lend  their  credit 
(accepting  time  drafts)  instead  of  their  money,  can  lend  very  much 
more,  and  our  importers  and  exporters  can  utilize  the  advantage 
of  perhaps  more  liberality  in  quantity  and  cost  of  the  service,  but 
the  exporters  abroad  are  placed  in  no  better  position:  they  are 
supposed  and  requested  to  part  with  their  goods  on  credit. 

Time  bills  on  London,  being  practically  out  of  use  the  world 
over,  it  is  necessary,  in  offering  the  substitute  (time  bills  on  New 
York),  to  make  these  marketable  and  easily  negotiable  every- 
where, and  to  this  end  there  must  be  an  ample  supply  of  and 
demand  for  them. 

London  and  New  York 

Not  all  drafts  drawn  on  London,  in  almost  every  foreign 
trading  city  of  the  world,  represented  goods  sold;  in  fact,  many 
were  drawn  in  advance  of  shipments,  and  as  credit  instruments  in 
revolving  loans,  etc. 

Consignments  of  manufactured  articles  for  future  sale  have 
been  largely  discontinued,  but  in  raw  products  they  were  main- 
tained to  a  great  extent.  Many  shipments  of  consigned  products 
were  sold  in  transit,  being  directed  for  "orders"  to  one  of  the 
several  distributing  ports  in  Europe,  although  as  a  rule  drafts 
for  advances  against  them  were  drawn  on  London.  While  these 
consignments  and  advances  are  nothing  new  with  New  York,  the 
ultimate  destination  of  these  products  was  for  consumption  in  the 
United  States. 

231 


Fourth  Session — Tuesday  Morning 


In  replacing  the  facilities  formerly  extended  by  London  for 
the  outright  or  future  sale  of  products  from  all  countries,  we 
must  afford  the  financial  and  commercial  assistance  needed,  and 
only  then  will  there  be  an  unlimited  market  for  drafts  on  New 
York,  whether  they  are  sight  drafts  or  at  30,  60,  90  days  or  more. 

The  marketing  equipment,  including  financing  of  shipments, 
advances  on  future  deliveries,  etc.,  may  demand  the  investing  of  a 
large  amount  of  capital  and  energy,  but  it  is  profitable  all  through, 
and  its  binding  effects  for  our  own  trade  would  be  decisive,  far 
reaching  and  lasting. 

The  volume  of  drafts  to  be  drawn  depends  on  the  amount  of 
exports,  advances,  loans,  temporary  or  permanent  investments 
in  each  country,  and  its  foreign  purchasing  capacity  is  limited  to 
this  aggregate  value.  The  increase  of  this  value  will  greatly 
depend  on  what  we  can  and  will  do.  If  we  confine  ourselves  to 
buy  what  we  need,  and  allow  the  exporters  the  privilege  of  draw- 
ing against  us  on  terms  suitable  to  us  alone,  suiting  our  conven- 
ience in  taking  time  to  pay,  we  shall  not  increase  the  possibilities 
of  expansion  of  our  sales,  nor  earn  the  profits  attached  to  the 
financing  of  their  trade  to  other  countries,  nor  contribute  to  the 
adoption  of  our  money  as  the  international  standard  for  ex- 
changes. 

The  Quest  of  New  Markets 

If  all  countries  have  to  look  for  new  markets  for  their 
products  to  replace  those  they  have  temporarily  lost,  they  will 
have  to  struggle  for  a  long  time — long  enough,  perhaps,  to  see  the 
end  of  the  war,  when  they  would  find  their  former  markets  open 
again.  And  then  it  is  not  a  matter  of  finding  the  market  alone, 
the  financing  of  the  trade  is  just  as  essential,  and  unless  a  recipro- 
cal trade  can  be  built  to  offset  sales  with  purchases,  the  market 
would  be  of  no  use. 

Very  few  countries,  if  any,  will  trade  between  themselves  in 
exactly  even  figures.  There  is  always  a  balance  against  one  of  the 
two  which  has  to  be  settled  elsewhere,  and  this  elsewhere  was 
formerly  London,  and  eventually  some  others  of  the  European 
money  markets  closed  today.  To  bring  the  settlement  to  New 
York  it  is  necessary  that  New  York  extend  adequate  facilities  to 
both,  and  that  the  bill  on  New  York  be  made  as  universally 
accepted  as  was  the  bill  on  London. 

London  achieved  this  because  it  extended  its  banking 
facilities  everywhere,  and  to  do  the  same  we  must  have  banks, 

232 


Credit  and  the  Future  of  American  Foreign  Trade 

American  or  other,  which  will  always  buy  and  always  sell  bills  on 
New  York. 

There  is  not  in  all  countries  either  the  spirit,  the  ability  or 
the  means  of  fostering  their  trade  and  finances.  Notwithstanding 
the  advanced  stage  of  domestic  banking  in  countries  like  Argen- 
tina, British  and  other  foreign  banks  were  and  still  are  probably 
a  more  important  element  in  financing  the  country's  foreign 
trade.  Their  activities  were  not  limited  to  buying  and  selling 
drafts.  They  took  directly  and  indirectly  a  further  interest  in 
the  business  affairs  of  the  country  at  large,  and  Argentina's 
great  trade  development  can  not  be  attributed  to  the  efforts  of 
Argentinians  alone. 

Customers  Need  Assistance 

If  we  wish  to  enhance  the  foreign  purchasing  capacity  of 
our  customers — all  other  countries — we  must  assist  them  in 
marketing  their  products  at  this  time.  We  cannot  and  will  not 
buy  more  than  we  need,  no  matter  how  much  sympathy  we  have 
for  any  country,  nor  will  we  pay  for  their  goods  any  more  than  we 
can  help.  Other  countries  will  do  no  better.  But  we  must  find 
the  market  for  them,  and  help  them  to  finance  their  exports. 
This  is  no  humanitarian  movement,  but,  again,  a  simple  business 
proposition  that  pays  well.  London  taxed  the  entire  world  for  it 
and  it  created  a  source  of  revenue  which  increased  yearly  the 
means  it  had  to  further  keep  up  the  movement. 

All  will  benefit  by  it;  our  manufacturers  and  exporters  by 
having  a  chance  to  increase  their  sales,  our  bankers  by  making 
larger  banking  profits,  those  engaged  in  marketing  the  goods  by 
the  natural  profits  arising  from  that  process,  and  our  customers  by 
being  able  to  place  their  products. 

The  war  has  been  a  revelation  to  many  people  as  regards  the 
sources  of  production  of  many  of  the  articles  we  consume,  some 
of  which  are  indispensable  even  for  the  maintenance  of  our 
industries.  Certain  raw  materials  are  unobtainable  today,  be- 
cause the  places  where  they  were  produced  are  closed  to  commerce. 
They  may  be  obtained  elsewhere,  and  if  they  are  one  of  our  own 
needs  will  be  filled,  and  our  customers  may  add  to  their  purchas- 
ing capacity  with  other  articles  of  export. 

Who  is  going  to  find  this  out  ?  We  may  have  as  much  inter- 
est to  buy  such  products  as  the  possible  producers  to  sell ;  but  we 
have  more  means,  not  only  for  the  research  work  required,  but 
also  for  exploiting  them. 

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Fourth  Session — Tuesday  Morning 


This  means  perhaps  investment  of  capital  and  energies 
something  which  is  quite  familiar  to  us  at  home,  but  entirely 
foreign  when  going  into  other  countries.  Investing  both  may 
result  very  profitably,  as  much  for  the  actual  returns  on  the 
investment  as  because  of  the  results  in  advancing  the  purchasing 
capacity  of  our  customers. 

Delusion  Respecting  Investments 

There  is  a  great  delusion  respecting  investments  of  American 
capital  abroad,  its  importance  as  a  trade  getter  being  often  over- 
estimated. Investing  is  done  permanently,  although  in  a 
temporary  way.  Selling  on  credit  is  nothing  else,  and  there  is 
no  doubt  that  extending  credit  greatly  increases  our  sales,  but 
making  permanent  investments  in  the  form  of  public  or  private 
loans  for  building  railways  or  other  public  works  does  not  neces- 
sarily increase  actual  sales.  The  development  of  the  resources 
of  any  country  naturally  advances  its  means  of  production 
and,  therefore,  it  is  able  to  consume  more,  but  the  people  do  not 
buy  more  goods  from  any  country  simply  because  capital  from 
that  country  has  been  invested  with  them.  They  will  buy  where 
it  suits  them  best.  A  striking  evidence  of  this  is  found  in  the 
immense  increase  of  American  exports  to  all  countries  where  not 
a  cent  of  American  capital  was  invested.  The  United  Kingdom, 
the  largest  supplier  of  capital  to  the  world  at  large,  has  not  sold 
us  more  goods  because  of  its  permanent  investments  here.  On 
the  contrary  it  has  bought  more  from  us,  and  with  British  money 
we  have  advanced  our  industries  in  a  way  to  endanger  British 
trade  in  other  countries.  We  took  away  all  we  could  of  the  foreign 
trade  of  the  United  Kingdom,  in  spite  of  having  used  its  money  to 
build  factories  and  even  to  finance  that  same  trade.  With 
British,  French,  German,  Belgian  and  Dutch  capital  many  of  our 
best  customers  have  developed  their  resources  and  increased  their 
purchases  of  American  goods,  which  have  been  steadily  replacing 
those  of  other  countries. 

Our  investments  will  do  no  more  nor  less  than  British, 
French,  German,  Belgian  and  Dutch  investments  did,  and  while 
we  may  have  a  chance  to  participate  in  the  increased  purchases 
of  the  countries  developed  with  our  money,  they  will  not  be  in 
any  way  entailed  to  us.  If  during  the  time  that  European  capital 
is  prevented  from  further  developing  other  countries  we  step  in 
with  our  capital,  we  shall  benefit  for  the  moment,  but  nothing 
can  tie  those  countries  to  us  in  such  a  way  that  after  the  war  is 

234 


Credit  and  the  Future  of  American  Foreign  Trade 

over  they  will  not  buy  European  goods  again — with  resources 
developed  with  our  money — if  it  suits  them  better. 

Often  loans  are  made  in  goods.  For  instance,  a  railway 
company  selling  its  bonds  may  take  in  payment  rails  or  other 
railway  material.  This  would  show  an  increase  of  sales  in  that 
line  during  that  year,  but  the  effect  of  the  working  of  that  railway 
in  developing  the  country,  shown  shortly  after,  will  be  the 
creating  of  further  resources  for  that  section  of  the  country 
and  purchases  with  them  will  not  necessarily  be  made  in  the  coun- 
try where  the  loan  was  placed. 

Investment  of  "Energies"  Needed 

The  investment  of  energies  has  a  more  influential  effect 
in  determining  the  course  of  trade.  American  companies  build- 
ing railways  with  American  engineers,  and  operating  them  under 
the  management  of  Americans,  may  represent  a  large  increase  in 
the  purchases  of  railway  supplies,  regardless  of  whether  the 
capital  for  the  construction  of  the  line  was  raised  in  the  United 
States  or  Europe.  American  engineers  and  clerks  will  also  con- 
sume certain  American  goods  which  are  always  found  adaptable 
to  the  country,  if  only  by  imitation. 

Investments  should  be  looked  at  merely  from  the  standpoint 
of  their  own  earning  capacity,  and  not  as  means  of  increasing 
trade.  Trade  will  increase  without  investments  in  some  cases; 
in  others,  investments  will  not  increase  the  trade  at  all. 

There  is  no  doubt  a  great  field  for  investment  of  American 
capital  in  foreign  countries,  and  the  people  who  might  be  tempted 
to  invest  will  not  care  at  all  whether  the  trade  is  going  to  be  in- 
creased or  not,  but  simply  whether  or  not  the  investment  is  going 
to  be  profitable.  Neither  had  the  British  as  investors  any  other 
prospects  in  mind,  and  it  is  up  to  the  people  who  have  money  to 
invest,  to  find  out  where  they  can  do  so  to  best  advantage. 

The  extension  of  facilities  for  marketing  and  financing  the 
products  from  all  countries  may  be  left  in  the  hands  of  business 
men  from  those  countries  who  may  look  for  them,  and  of  American 
business  men  who  may  supply  them,  but  the  work  of  developing 
their  resources  in  order  that  we  may  have  a  chance  in  participat- 
ing in  their  increased  purchasing  capacity  cannot  be  left  entirely 
in  the  hands  of  would-be  investors-for-profit.  It  would  be  too 
long  a  process  and  we  must  act  quickly.  An  organization  of 
some  kind,  other  than  one  merely  mercenary,  should  be  formed 
to  undertake  the  research  work  and  promote  enterprises,  putting 

235 


Fourth  Session — Tuesday  Morning 


before  investors  the  opportunities  as  and  when  they  are  dis- 
covered. 

It  is  quite  possible  that  this  organization  may  be  made 
profitable  also  (first-hand  knowledge  always  is),  and  then  pro- 
moting enterprises  on  a  sound,  safe  and  honest  basis  is  always 
good  business. 

Effect  of  the  "Appreciated"  Dollar 

There  has  been  a  great  misapprehension  in  regard  to  the  en- 
hanced value  of  the  American  dollar  in  almost  all  countries.  In 
some,  money  has  become  depreciated  as  compared  to  ours, 
and  will  continue  depreciated  so  long  as  we  remain  on  a  gold 
basis  and  the  others  only  have  the  inconvertible  paper  circulation 
to  which  they  have  fallen;  and  the  course  of  exchange,  direct  or 
indirect,  has  practically  broken  down  because  of  the  disorganiza- 
tion in  settling  balances  of  international  trade. 

The  United  Kingdom  has  been  buying  from  us  in  much  larger 
volume  than  ever  before  and  has  been  exporting  very  much  less 
than  in  normal  times.  The  invisible  means  of  offsetting  this 
balance  (freight  and  insurance  charges,  banker's  interest  and 
commissions,  trade  commissions  and  profits,  dividends  and 
interest  on  investments,  tourists'  expenses  and  a  few  others)  being 
greatly  diminished,  the  United  Kingdom  has  had  to  face  actual 
payment  of  its  purchases  in  gold  or  by  borrowing  (delaying  pay- 
ment). Not  being  willing  to  release  gold  in  quantities  large 
enough  to  cover  its  indebtedness,  it  has  borrowed,  but  the 
amount  of  the  loans,  and  eventually  of  floating  credits,  has  not 
been  enough  to  bring  matters  to  a  level,  and  "English  money"  is 
at  a  discount  with  ours.  In  Japan  it  has  been  different.  With 
a  balance  always  against  us,  Japan  has  had  means  enough  to  pay 
for  its  imports  and  its  money  has  been  maintained  at  par  with  ours. 

Gold  being  hoarded  or  locked  up  and  balances  not  being 
adjustable  as  an  ultimate  resort  in  this  form,  exchanges  do  not 
keep  any  longer  within  the  gold  value  of  the  respective  moneys. 
While  still  counting  in  relation  to  the  theoretical  equivalences 
rates  of  exchange  are  fixed  exclusively  by  demand  and  supply. 
Demand  being  larger  than  supply,  it  was  most  natural  that  rates 
should  rise,  signifying  a  premium  on  dollars,  or  a  discount  on 
local  money  in  reference  to  dollars. 

To  see  "dollars"  at  a  premium  almost  everywhere  may 
satisfy  national  vanity,  but  nothing  could  be  more  harmful  as  far 
as  foreign  trade  is  concerned.  In  fact,  our  goods  cost  more  in  all 
places  where  a  premium  has  to  be  paid  for  "dollars,"  and  this, 

236 


Credit  and  the  Future  of  American  Foreign  Trade 

meaning  increased  cost  in  terms  of  local  money,  shrinks  the  pur- 
chasing capacity  of  the  people  for  goods,  the  value  of  which  is 
paid  for  in  dollars.  Merchants  do  not  raise  their  prices  in  exact 
proportion  to  the  premium  they  must  pay  for  foreign  money,  but 
they  charge,  as  a  rule,  very  much  more  either  as  a  means  of  pro- 
tecting themselves  against  future  rises,  or  simply  to  make  larger 
profits. 

But  neither  should  we  want  to  see  our  dollars  at  a  discount, 
and  this  could  not  happen  unless  we  also  suspended  gold  pay- 
ments. Fortunately  there  is  no  chance  of  it  happening.  Coun- 
tries having  balances  against  us  dispose  of  these  balances  in 
paying  others  against  whom  we  probably  have  a  balance  to  collect, 
and  the  possibility  of  our  parting  with  our  gold  is  thus  minimized. 

Our  Plethora  of  Gold 

Any  country,  however,  having  a  right  to  obtain  gold  from  us 
is  welcomed  to  it,  as  it  is  authoritatively  stated  we  have  more  than 
we  want.  Whether  this  is  true  or  not,  is  not  under  discussion  at 
this  moment.  It  can  be  said,  however,  that  other  countries  not 
using  gold  as  a  rule  they  would  have  no  object  in  securing  it. 

Our  interest  should  be  as  a  matter  of  self-conservation,  and 
as  a  means  of  upholding  the  purchasing  capacity  of  our  customers, 
to  maintain  normal  rates  of  exchange  with  all;  and  for  this  pur- 
pose it  is  most  essential  that  we  assist  all  countries  in  financing 
themselves — increasing  their  supply  of  exchange.  Of  the  two 
means  available,  increasing  exports  and  making  loans,  the  first 
is  certainly  the  best  for  both — the  other  country  and  ourselves. 

This  is  why  the  importance  of  tendering  commercial  assist- 
ance cannot  be  too  greatly  emphasized. 

The  Cooperation  Needed  to  Develop  Our  Export  Trade 

There  are  several  things  to  be  done  in  order  to  maintain 
and  develop  a  stable  export  trade  under  present  conditions  and 
lay  the  foundation  for  the  future. 

Adequate  shipping  facilities  are  indispensable  in  one  form 
or  the  other,  so  long  as  ships  are  available  for  transportation  to 
and  from  all  countries.  This  must  be  resolved  at  once.  Further 
discussion  will  only  keep  us  in  suspense  for  a  period  long  enough 
perhaps  to  see  the  end  of  the  war. 

Banking  facilities  must  be  extended  in  a  way  that  credit 
can  be  granted  to  our  foreign  customers  as  liberally  as  they  need 
it.  To  discount  bills  of  exchange  on  a  few  countries  only  is  not 

237 


Fourth  Session — Tuesday  Morning 


what  is  wanted.  The  service  must  include  all  and  every  country, 
and  protection  must  be  extended  to  our  exporting  interests  in 
taking  due  care  of  their  accounts  everywhere. 

Our  foreign  customers  should  be  assisted  in  marketing  their 
products  at  this  time  and  in  financing  their  trade.  They  must 
be  helped  to  maintain  the  parity  of  their  exchange,  doing  away 
with  the  "dollar  at  a  premium,"  which  is  the  most  harmful  of  all 
fascinations.  Their  resources  must  be  investigated  to  further 
develop  their  purchasing  capacity  at  the  proper  time.  In  doing 
this  we  shall  weave  a  net  of  commercial  ties,  agreeable  and  profit- 
able to  all,  which  will  be  of  permanent  benefit. 

The  cooperation  of  all  is  needed — shipping  interests, 
bankers,  investors,  merchants  and  manufacturers.  To  look  after 
what  is  affording  inflated  profits  today  and  neglecting  the  future 
is  simply  killing  the  goose  of  the  golden  eggs. 

Many  interests  may  clash  in  this  movement,  especially 
when  looking  to  control  or  dominate  the  course  of  certain  activi- 
ties, but  a  truce  must  be  declared,  and  for  once  all  must  unite  in 
the  same  effort.  Otherwise  the  millions  accumulated  while  the 
war  lasts  may  create  an  unfriendly  feeling  among  the  spoiled  and 
the  neglected,  and  may  not  be  enough  to  offset  the  loss  of  trade 
when  peace  shines  again  over  the  world. 


THE  CHAIRMAN:  I  have  always  thought  one  of  the  strong 
points  of  the  National  Association  of  Manufacturers  was  their 
wise  selection  of  men  to  help  them  carry  out  their  propaganda; 
and  I  am  sure  that  you  will  agree  with  me  that  in  selecting 
the  gentleman  who  has  just  addressed  us  as  their  banking  ad- 
viser they  have  done  well,  and  could  do  no  better.  (Applause.) 

Owing  to  the  lateness  of  the  hour  we  are  not  going  to  have 
any  discussions  upon  the  remarks  that  have  just  been  made,  and 
we  will  go  on  to  the  next  subject. 

[Time  did  not  permit  of  the  discussion  of  the  paper  on  "Credit  and  the 
Future  of  American  Foreign  Trade,"  as  announced  on  the  program,  but  as 
Mr.  William  E.  Peck,  of  William  E.  Peck  &  Co.,  New  York,  had  prepared 
a  brief  address  on  the  subject  Mr.  Peck's  views  are  herewith  appended, 
based  as  they  are  on  his  long  experience  as  an  export  merchant. — Secre- 
tary.] 

Comments  on  the  Credit  Situation 

By  WILLIAM  E.  PECK 

Mr.  Chairman  and  Gentlemen:  Successful  trading  with 
foreign  clients  depends  upon  care  exercised  in  granting  credit. 

238 


Comments  on  the  Credit  Situation 


Of  what  use  is  it  to  sell  goods  unless  they  are  well  sold  ?  Better 
a  foreign  business  of  $10,000  with  reasonable  profit  than  one 
of  $100,000  with  loss. 

Failure  to  appreciate  the  importance  of  that  combination  of 
six  letters  spelling  the  word  "credit"  has  wrecked  more  export 
houses  than  all  other  causes  put  together,  yet  the  lesson  is  still 
unlearned.  Manufacturers  and  shippers  will  not  realize  that 
foreign  credit  is  more  hazardous  than  domestic  and,  therefore, 
should  be  more  closely  scrutinized.  A  receiver  for  an  export 
house  once  remarked  that  he  would  rather  do  domestic  business 
over  a  dynamite  factory  than  to  ship  goods  to  South  America 
on  a  2^2  per  cent,  margin  of  profit;  yet  such  business  is  as  safe 
as  any  other,  if  care  is  exercised. 

Large  manufacturers  and  jobbers  maintain  credit  depart- 
ments for  their  domestic  transactions,  and  orders  are  not  exe- 
cuted until  they  have  been  scrutinized  and  sanctioned  by  their 
credit  man.  Thus  the  salesman,  who  naturally  wishes  to  swell 
his  own  sales,  is  under  the  restraint  of  credit  experts.  Yet  these 
same  houses  in  dealing  with  foreign  countries  accept  the  orders 
of  their  interested  salesmen  without  having  the  same  intimate 
knowledge  of  their  client's  standing  that  they  require  at  home, 
and  also  accept  with  too  great  avidity  direct  orders  from  un- 
known firms  using  fancy  letterheads. 

Many  manufacturers  throw  precaution  to  the  wind  when 
they  venture  direct  export  business,  although,  aside  from  panic 
times,  the  possibilities  of  trouble  are  much  greater  than  in  the 
home  trade,  where  information  is  easily  obtained,  where  a  doubt- 
ful risk  can  be  reached  quickly  and  where  the  law  can  be  applied 
with  comparatively  little  expense.  Even  in  good  times  such 
troubles  are  manifold  from  the  refusal  of  a  draft  on  good  people, 
because  of  some  slight  difference  in  the  method  and  time  of  ship- 
ment, in  the  quality  of  the  goods,  or  some  real  or  fancied  griev- 
ance, down  to  the  refusal  to  accept  or  pay  accepted  paper,  due  to 
financial  inability,  either  temporary  or  permanent. 

The  leading  export  houses  found  out  long  ago  that,  in  view 
of  the  long  distances  involved,  the  only  way  to  handle  foreign 
credit  was  through  the  establishment  of  branch  offices  and  agen- 
cies in  all  the  important  cities  of  all  the  countries  in  which  they 
traded  extensively,  and  even  with  these  safeguards  losses  occur 
on  draft  operations,  and  unless  the  quality  of  representation  is 
of  the  best  serious  results  may  follow.  In  case  of  trouble  it  is 
cheaper  to  accept  the  best  settlement  obtainable  at  the  start, 

239 


Fourth  Session — Tuesday  Morning 


rather  than  to  take  chances  on  protracted  negotiations,  especially 
such  as  involve  the  assistance  of  the  law,  which  in  most  foreign 
countries  simply  means  throwing  good  money  after  bad. 

The  exporter  not  only  consults  with  the  different  local  banks 
in  order  to  get  a  line  on  a  risk,  but  is  also  able,  through  personal 
contact,  to  judge  his  customers'  ability,  integrity  and  prosperity, 
and  bankers  often  come  to  him  for  information  regarding  firms 
which  he  is  better  able  to  secure.  He  keeps  up-to-date  through  a 
generous  use  of  the  cable,  and  is,  therefore,  prepared  for  dis- 
turbance due  to  locusts,  pestilence,  torrential  rains,  droughts, 
revolutions  and  panics,  which  periodically  occur  and  must  be 
reckoned  with. 

There  is  sufficient  risk  in  draft  operations  without  even 
considering  business  on  open  account,  and  the  shipper  who  is 
foolish  enough  to  attempt  the  latter  is  doomed  to  failure.  Most 
of  the  merchants  south  of  the  equator,  especially  in  South 
America,  know  that  American  shippers  do  their  export  business 
against  draft  instead  of  on  open  account  and  it  is  unnecessary, 
therefore,  to  incur  this  risk. 

In  conclusion  my  advice  to  all  manufacturers  and  shippers 
desirous  of  export  trade  is  either  to  maintain  a  foreign  credit 
department  and  watch  foreign  risks  more  keenly  than  domestic 
or  else  to  cooperate  with  long  established  export  houses  who  will 
relieve  them  of  vexatious  shipping  troubles,  pay  cash  for  their 
goods,  assume  the  risk  of  the  accounts,  display  sample  lines  at 
their  offices  and  secure  a  maximum  amount  of  trade  at  a  mini- 
mum of  cost. 


THE  CHAIRMAN:  Gentlemen,  again  I  present  to  you  a 
speaker  of  international  reputation,  Mr.  Moore,  who  you  know 
long  occupied  the  position  of  counselor  for  the  Department  of 
State,  and,  in  that  capacity,  was  instrumental  in  the  negotiation 
of  commercial  treaties  and  other  international  agreements  of 
great  importance.  I  know  you  will  listen  with  great  interest  to 
Mr.  Moore,  who  will  speak  on  "The  International  Situation  and 
Future  Trade  Relations." 

I  have  the  honor  and  the  pleasure  of  introducing  to  you, 
gentlemen,  the  Honorable  John  Bassett  Moore. 


240 


The  International  Situation  and  Future  Trade  Relations 

The  International  Situation  and    Future  Trade 

Relations 

By  HON.  JOHN  BASSETT  MOORE. 

In  spite  of  the  prevailing  uncertainty  as  to  the  duration  of 
the  present  conflict  in  Europe,  the  commercial  world  is  anxiously 
looking  forward  to  the  time  when  normal  trade  relations  will 
be  restored  and  competition  will  again  become  general  and 
active.  It  is  an  admitted  principle  of  international  law  that, 
with  the  exception  of  engagements  specially  applicable  to  a 
state  of  hostilities,  war  abrogates  all  treaties  between  the  bellig- 
erents of  an  executory  nature,  and  in  this  category  are  em- 
braced commercial  agreements.  It  will  therefore  be  necessary, 
when  peace  is  reestablished,  for  the  countries  now  engaged  in 
armed  strife  to  take  up  without  delay  the  question  of  the  condi- 
tions and  regulation  of  trade. 

Treaty  Relations  of  the  United  States 

With  the  exception  of  Russia,  with  whom  the  treaty  of  com- 
merce and  navigation  of  1832  had  lately  been  terminated  be- 
cause of  what  was  termed  the  passport  question,  the  United 
States  at  the  outbreak  of  hostilities  had  commercial  treaties  with 
all  the  belligerents.  As  the  United  States  has  remained  neutral, 
those  treaties  have  not  been  disturbed;  but  it  is  by  no  means 
certain  that  they  may  not  eventually  have  to  be  revised,  or  sup- 
plemented, in  order  to  meet  new  arrangements  between  the 
countries  now  at  war. 

Chief  Object  of  Commercial  Treaties 

A  detailed  analysis  of  our  commercial  treaties  is  not  possible 
within  the  limits  of  the  present  address.1  Generally  speaking,  I 
may  say  that,  apart  from  special  agreements  of  reciprocity,  their 
chief  object  has  been  the  creation  of  equal  conditions  under 
which  the  American  merchant  and  ship-owner  might  freely 
compete  with  his  rivals.  To  this  end  it  has  been  customary  to 
provide,  at  the  outset,  for  a  reciprocal  freedom  of  commerce 
between  the  territories  of  the  contracting  parties,  so  that  the 
citizens  of  each  party  should  have  liberty  to  come  with  their 
ships  and  cargoes  into  all  the  ports  and  places  of  the  other  to 

i  Such  an  analysis  may  be  found  in  "Commercial  Treaties  of  the  United  States.  A 
Brief  by  Carman  F.  Randolph,  of  the  New  York  Bar.  Published  by  the  National  Foreign 
Trade  Council,  64  Stone  Street,  New  York  City." 

241 


Fourth  Session — Tuesday  Morning 


which  the  ships  or  cargoes  of  any  other  foreign  nation  might  be 
permitted  to  come,  and  on  the  same  terms.  In  harmony  with 
this  general  clause,  it  is  usually  also  stipulated  that  no  discrim- 
inating duties  of  any  kind  shall  be  levied,  and  that  no  higher 
or  other  duties  shall  be  imposed  on  the  importation  into  the  one 
country  of  the  products  or  manufactures  of  the  other  country 
than  shall  be  payable  on  like  articles  of  any  other  foreign  coun- 
try. The  same  stipulation  is  applied  to  export  duties.  Equality 
of  navigation  duties  is  also  prescribed,  whether  they  relate  to 
tonnage,  to  light  or  harbor  dues,  to  pilotage,  to  salvage,  or  to 
any  other  local  charges;  and  it  is  further  provided  that  this 
equality  of  duties  shall  exist  without  regard  to  the  flag  the 
vessel  flies,  whether  it  be  a  vessel  of  the  country  or  a  foreign 
vessel. 

Discrimination  Not  Permitted 

It  may  here  be  remarked  that  by  a  clause  ( J  Subsection  7)  of 
the  existing  Tariff  Act  of  October  3,  1913,  it  was  enacted  that  a 
discount  of  5  per  cent,  on  all  duties  imposed  by  the  act  should 
be  allowed  on  goods,  wares  and  merchandise  imported  in  regis- 
tered vessels  of  the  United  States.  The  clause  was,  however, 
coupled  with  the  proviso  that  it  should  not  be  so  construed  as 
to  abrogate  or  impair  or  affect  the  provisions  of  any  treaty  of  the 
United  States;  and  as  the  Attorney-General  subsequently  held 
that  the  clause  could  not  be  enforced  without  violating  the  stipu- 
lations of  existing  treaties,  the  Treasury  suspended  the  enforce- 
ment of  the  act,  the  interpretation  and  application  of  which  are 
still  the  subject  of  litigation.  The  policy  to  which  it  was  thus 
proposed  to  revert  was  practically  universal  a  hundred  years 
ago.  In  the  third  decade  of  the  last  century,  largely  as  the 
result  of  the  efforts  of  the  United  States,  it  was  reciprocally 
abandoned  in  the  belief  that,  as  flag  discriminations,  if  practiced 
by  one  nation,  were  necessarily  enforced  by  others,  the  advan- 
tage gained  on  the  homeward  voyage  was  offset  on  the  outward 
voyage  by  a  corresponding  loss. 

The  Most-Favored-Nation  Clause 

Another  stipulation  usually  found  in  the  commercial  treaties 
of  the  United  States  is  that  which  is  commonly  known  as  the 
most-favored-nation  clause.  This  clause  is  found  in  various 
forms.  Usually  it  stipulates  that  if  either  contracting  party 
shall  grant  to  a  third  nation  any  favor  in  commerce  or  naviga- 


The  International  Situation  and  Future  Trade  Relations 

tion,  such  favor  shall  immediately  enure  to  the  benefit  of  the 
other  party,  freely,  if  freely  granted,  or  upon  paying  the  same 
compensation,  if  conditionally  granted. 

The  interpretation  of  the  most-favored-nation  clause  is  a 
question  as  to  which  the  United  States  and  the  countries  of  Europe 
have  long  differed.  According  to  the  European  interpretation, 
it  covers  reductions  of  duty  under  special  agreements  of  com- 
mercial reciprocity;  according  to  the  United  States'  interpre- 
tation, it  does  not  embrace  such  concessions.  The  view  that 
such  concessions,  because  they  are  reciprocal,  cannot  be  re- 
garded as  "favors''  was  first  enunciated  in  1815,  and  has  since 
been  generally  maintained  by  the  United  States.  In  at  least  one 
instance,  however,  the  other  contracting  party  has  been  able  to 
show  by  the  record  of  the  negotiations  that  a  particular  clause 
was  in  fact  intended  to  embrace  reciprocal  concessions.  This 
was  the  case  with  the  treaty  with  Switzerland  of  1850.  Im- 
mediately after  the  conclusion  of  the  reciprocal  agreement  with 
France  of  May  30,  1898,  under  the  provisions  of  the  Dingley 
Act,  Switzerland  claimed  for  her  imports  into  the  United  States 
the  same  concessions  as  were  granted  to  French  imports,  on  the 
ground  that  the  most- favored-nation  clauses  in  the  treaty  of 
1850  were,  when  entered  into,  expressly  understood  to  have  that 
effect.  The  United  States,  after  examining  the  record,  admitted 
the  claim  to  be  well  founded,  but  at  the  same  time  gave  notice  of 
the  termination  of  the  clauses — an  act  that  produced  in  Switzer- 
land a  feeling  of  strong  dissatisfaction,  the  United  States  having 
always  had  the  full  benefit  of  the  treaty  in  that  country. 

Another  question  of  difference  in  regard  to  the  most-favored- 
nation  clause  appeared  in  1899,  when  the  United  States  took 
the  ground,  in  its  relations  with  Germany,  that  the  clause  must 
be  applied  in  each  country  uniformly,  so  that  one  of  the  con- 
tracting parties,  even  though  it  should  apply  the  restrictive  inter- 
pretation in  its  own  territory,  might  demand  the  benefit  of  the 
liberal  interpretation  in  the  other  country,  if  it  prevailed  there. 

Reciprocity  Agreements 

This  brings  us  to  the  consideration  of  the  subject  of  special 
agreements  of  commercial  reciprocity,  designed  to  increase  trade 
by  mutual  reductions  of  duty  below  the  prevailing  rates.  The 
United  States,  soon  after  the  Declaration  of  Independence,  pro- 
claimed its  adhesion  to  the  principle  of  reciprocity  as  a  means 
of  getting  rid  of  commercial  monopolies  and  discriminations,  and 

243 


Fourth  Session — Tuesday  Morning 


securing  liberty  to  trade.  As  has  been  pointed  out,  our  earlier 
treaties  had  this  end  chiefly  in  view.  Occasionally,  as  in  the 
treaty  with  France  of  1831,  for  the  settlement  of  claims,  special 
concessions  of  duty  were  made  on  certain  articles  of  mer- 
chandise. In  1854,  a  treaty  quite  broad  in  its  scope  was  made 
with  Great  Britain,  under  which,  largely  for  the  purpose  of 
effecting  an  adjustment  of  the  fisheries  dispute,  reciprocal  reduc- 
tions of  duty  as  between  the  United  States  and  Canada  were 
made  on  many  articles  of  merchandise.  For  causes  which  need 
not  here  be  explained  this  treaty  was  terminated  on  notice  in 
1866.  A  proposal  to  renew  it  in  a  modified  form  was  rejected  by 
the  Senate  of  the  United  States  in  1873.  In  1875  an  extensive 
treaty  of  reciprocity,  having  also  a  political  aspect,  was  made 
with  the  Hawaiian  Islands. 

Reciprocity  at  the  First  International  American  Conference 

In  1888  the  subject  of  commercial  reciprocity  was  included  in 
the  program  proposed  to  the  American  nations  for  the  First 
International  American  Conference.  Up  to  that  time,  however, 
the  advocates  of  protection  in  the  United  States  had  generally 
looked  with  disfavor  upon  departures  from  the  established  sched- 
ule of  duties,  and  the  tariff  bill  of  1890,  as  formulated  in  the 
House  and  in  the  Senate,  contained  no  clause  looking  to  the 
making  of  reciprocal  concessions.  At  this  stage  Mr.  Elaine  came 
to  the  front,  and  by  a  dramatic  public  appeal  secured  the  inser- 
tion in  the  bill  of  a  clause  (Section  3),  the  avowed  object  of 
which  was  "to  secure  reciprocal  trade."  To  this  end,  sugar, 
molasses,  coffee,  tea,  and  hides,  raw  and  uncured,  were  put  on 
the  free  list  till  January  i,  1892.  But,  after  that  date,  they 
became  subject  to  duty,  whenever  the  President  should  by  pro- 
clamation declare  that,  considering  their  free  introduction  into 
the  United  States,  the  country  producing  and  exporting  them 
imposed  upon  the  agricultural  or  other  products  of  the  United 
States  duties  or  exactions  which  he  deemed  to  be  "reciprocally 
unequal  and  unreasonable."  (Act  of  October  i,  1890,  commonly 
called  the  McKinley  Act.) 

Under  this  clause,  agreements  were  concluded  with  Brazil 
(February  5,  1891) ;  Spain,  in  relation  to  Cuba  and  Porto 
Rico  (July  31,  1891);  Dominican  Republic  (August  I,  1891); 
Salvador  (December  31,  1891 ;  December  27,  1892)  ;  Germany 
(February  I,  1892)  ;  Great  Britain,  in  relation  to  British  Guiana, 
Trinidad  and  Tobago,  Barbados,  the  Leeward  Islands,  and  the 

244 


The  International  Situation  and  Future  Trade  Relations 

Windward  Islands,  except  Grenada  (February  i,  1892)  ;  Nicara- 
gua, (March  12,  1892)  ;  Honduras  (April  30,  1892)  ;  Guatemala 
(May  18,  1892),  and  Austria-Hungary  (May  26,  1892). 

On  March  15,  1892,  a  proclamation  was  issued  suspending 
the  free  entry  of  sugar  and  the  other  enumerated  articles  from 
Colombia,  Haiti,  and  Venezuela.  This  action  naturally  gave 
rise  to  protests.  Brazil  alone,  of  the  independent  countries  of 
South  America,  had  entered  into  an  arrangement;  and  Brazil, 
Colombia,  and  Venezuela  were  not  the  only  countries  of  South 
America  that  produced  and  exported  the  enumerated  articles. 
With  Colombia  there  took  place  a  diplomatic  controversy,  in 
which  that  government  pertinently  cited  certain  provisions  of 
its  commercial  treaty  with  the  United  States.  These  things  may 
not,  however,  be  regarded  as  necessary  incidents  of  the  carrying 
out  of  a  plan  of  commercial  reciprocity.  In  some  cases,  and 
notably  in  that  of  Cuba  and  Porto  Rico,  the  arrangements  re- 
sulted in  an  important  increase  of  exchanges. 

The  agreements  made  under  Section  3  of  the  McKinley  Act 
fell  with  the  repeal  of  that  law  by  the  general  tariff  act  of 
August  27,  1894.  It  is  understood  that  the  termination  of  the 
arrangement  as  to  Cuba  materially  contributed  to  the  local  in- 
dustrial distress  which  hastened  the  revolutionary  outbreak  in 
February,  1895. 

Reciprocity  Under  the  Dingley  Act 

By  Section  3  of  the  Dingley  Act  of  July  24,  1897,  two  dis- 
tinct provisions  were  made  for  reciprocal  reductions  of  duty. 
By  the  first  clause  it  was  declared  that,  for  the  purpose  of 
"equalizing"  the  trade  of  the  United  States  with  countries  pro- 
ducing and  exporting  argols,  or  crude  tartar,  or  wine  lees,  crude ; 
brandies,  or  other  spirits  manufactured  or  distilled  from  grain 
or  other  materials;  champagne  and  other  sparkling  wines;  still 
wines,  and  vermuth;  paintings  and  statuary,  or  any  of  those 
articles,  the  President  was  authorized  to  make  certain  conces- 
sions in  duties  in  return  for  reciprocal  concessions  respecting  the 
products  and  manufactures  of  the  United  States.  By  the  second 
clause,  the  terms  of  the  reciprocity  clause  of  the  McKinley  Act 
were  substantially  reenacted,  with  a  substituted  list  of  articles, 
consisting  of  coffee,  tea,  and  tonquin,  tonqua,  or  tonka  beans,  and 
vanilla  beans.  Moreover,  by  Section  4  of  the  act,  a  basis  was 
laid  for  the  making  of  reciprocity  arrangements  by  treaty,  sub- 
ject to  the  advice  and  consent  of  the  Senate;  while,  by  Section  5, 

245 


Fourth  Session — Tuesday  Morning 


the  levy  of  countervailing  duties  on  articles  receiving  a  bounty 
in  the  country  of  export  was  authorized. 

Under  Section  3  of  the  Dingley  Act,  reciprocity  arrangements 
were  eventually  made  with  France,  Germany,  Great  Britain,  Bul- 
garia, the  Netherlands,  Portugal,  Spain,  and  Switzerland. 

Aldrich-Payne  Act:  "Maximum"  and  "Minimum"  Tariffs 

By  the  so-called  Aldrich-Payne  Act  of  August  5,  1909,  a  new 
feature  was  introduced.  Provision  was  made  (Section  4)  for 
the  termination  of  the  commercial  agreements  concluded  under 
Section  3  of  the  Dingley  Act,  the  reciprocity  treaty  with  Cuba, 
which  was  not  based  on  that  section,  being  expressly  declared 
to  remain  unaffected,  and  there  was  introduced  the  principle  of  a 
minimum  tariff  and  a  maximum  tariff.  The  minimum  tariff  con- 
sisted of  the  dutiable  and  free  lists.  The  maximum  tariff  con- 
sisted of  the  rates  prescribed  by  the  act  and  in  addition  thereto 
25  per  cent,  ad  valorem,  which  was  to  be  levied  after  March  31, 
1910,  except  as  to  countries  in  which  the  President  should  have 
proclaimed  that  there  were  "no  terms  or  restrictions,  charges  or 
exactions,"  and  no  bounties,  export  duty  or  prohibition,  which 
"unduly  discriminated"  against  the  United  States  and  its  prod- 
ucts, and  that  such  products  were  accorded  "reciprocal  and 
equivalent"  treatment.  Provision  was  also  made  (Section  6)  for 
the  collection,  on  imports  receiving  an  export  bounty,  of  a 
countervailing  duty  equal  to  the  net  amount  of  the  'bounty. 

Present  Status  of  Reciprocity 

The  plan  embodied  in  the  Act  of  August  5,  1909,  was  done 
away  with  by  the  general  tariff  act  of  October  3,  1913,  which  is 
now  in  force.  By  this  act,  a  new  provision  was  introduced  (Sec- 
tion IV  A),  by  which  the  President  was  authorized  and  em- 
powered "to  negotiate  trade  agreements  with  foreign  nations 
wherein  mutual  concessions  are  made,  looking  toward  freer 
trade  relations  and  further  reciprocal  expansion  of  trade  and 
commerce/'  with  the  proviso,  however,  that  such  agreements, 
before  becoming  operative,  should  be  "submitted  to  the  Congress 
of  the  United  States  for  ratification  or  rejection." 

In  principle,  the  proposal  to  submit  trade  agreements  to  Con- 
gress rather  than  to  the  Senate,  where  legislative  provision  has 
not  already  been  made  for  their  administrative  conclusion  and 
enforcement,  appears  to  be  correct.  But  nothing  has  so  far 
been  accomplished  under  the  clause  in  question.  This  circum- 

246 


The  International  Situation  and  Future  Trade  Relations 

stance  may  be  ascribed,  in  the  first  place,  to  the  fact  that,  as 
the  effects  of  a  new  tariff  act  on  the  public  revenues  can  never 
be  certainly  foretold,  it  was  reasonable  to  observe  for  a  time  the 
results  of  its  operation,  and,  in  the  second  place,  to  the  fact  that 
ten  months  after  the  act  was  passed,  the  great  war  in  Europe 
broke  out  with  a  consequent  decline  in  the  revenue  from  impor- 
tations. 

Lack  of  Success  of  Reciprocity  with  South  America 

There  is,  however,  one  subject  to  which  I  deem  it  important 
to  advert,  and  that  is  the  lack  of  success  in  concluding  agree- 
ments of  commercial  reciprocity  with  the  countries  of  South 
America.  The  agreement  with  Brazil,  which  was  terminated  by 
the  Act  of  1894,  was  not  subsequently  renewed,  nor  was  any 
arrangement  negotiated  to  take  its  place.  In  reality,  it  has  been 
difficult  for  the  countries  of  South  America  to  conclude  agree- 
ments involving  a  reduction  of  import  and  export  duties.  Inter- 
nal duties,  even  where  they  exist,  are  insufficient  for  the  pur- 
poses of  government,  and  the  collection  of  duties  at  the  custom 
house  is  essential  to  the  public  welfare.  If  the  United  States, 
with  its  large  internal  revenues,  has  not  found  it  practicable 
lately  to  enter  upon  a  campaign  for  the  reciprocal  reduction  of 
customs  duties,  still  less  can  it  be  expected  that  countries  whose 
internal  revenues  are  comparatively  small  will  make  haste  to 
reduce  or  suspend  such  duties. 

The  Attitude  of  the  British  Colonies 

For  a  number  of  years  there  has  been  developing  in  the  British 
Empire  a  system  of  preferences  between  the  mother  country  and 
the  colonies.  This  subject  is  not  devoid  of  importance  to  the 
commercial  world.  During  the  first  half  century  of  its  existence, 
the  United  States  was  obliged  to  contend  with  the  system  of 
colonial  monopoly.  This  system  has  not  been  restored;  but  a 
system  of  preferential  duties  between  the  widely  separated  parts 
of  great  empires  would  necessarily  render  competition  in  trade 
more  difficult.  In  1911,  as  is  well  known,  an  attempt  was  made 
to  reestablish  relations  of  commercial  reciprocity  between  the 
United  States  and  Canada  on  the  basis  of  independent  but 
reciprocal  legislation  in  each  country.  The  plan  was  defeated; 
one  of  the  causes  of  its  failure  being  the  fact  that,  partly  as  the 
result  of  certain  incidents,  it  came  to  be  regarded  by  our  north- 
ern neighbors  as  a  measure  inimical  to  the  growth  of  what  is 
commonly  called  Canadian  nationality. 

247 


Fourth  Session — Tuesday  Morning 


Anti-dumping  Legislation 

It  is  also  worthy  of  notice  that  there  has  sprung  up  in  certain 
of  the  British  dominions,  that  is  to  say,  in  Australia,  Canada, 
and  South  Africa,  a  kind  of  legislation  designed  to  prevent  what 
is  popularly  termed  "dumping."  An  enactment  of  this  kind  was 
made  in  Australia  in  1906,  as  part  of  what  was  styled  the  Indus- 
tries Preservation  Act,  a  general  law  against  monopoly  and  un- 
fair competition.  In  the  Canadian  Customs  Tariff  of  1907  a 
clause  (Section  6)  was  inserted,  providing  for  the  collection  of 
a  special  duty  not  exceeding  15  per  cent,  ad  valorem,  called  a 
dumping  duty,  on  articles  imported  into  Canada  of  a  class  or 
kind  made  or  produced  in  that  country,  where  the  export  or 
actual  selling  price  to  the  Canadian  importer  is  "less  than  the 
fair  market  value  of  the  same  article  when  sold  for  home  con- 
sumption in  the  usual  or  ordinary  course  in  the  country  whence 
exported  to  Canada  at  the  time  of  its  exportation  to  Canada." 
In  1914,  the  government  of  the  Union  of  South  Africa  adopted  a 
statute  closely  following  the  language  of  the  Canadian  act.  By 
regulations  put  into  force  in  Canada  on  September  i,  1914,  the 
dumping  duty  is  imposed  in  all  cases  where  the  fair  market 
value,  as  above  defined,  exceeds  the  selling  price  to  the  importer 
in  Canada  by  5  per  cent. l 

A  clause,  modeled  on  the  Canadian  law  and  regulations,  was 
included  in  the  Underwood  bill  as  it  passed  the  House  in  1913, 
but  it  was  omitted  by  the  Committee  on  Finance  in  the  Senate. 

Sugar  Conventions  and  Bounty  Systems 

The  war  in  Europe  has  so  materially  altered  the  usual  condi- 
tions of  competition  in  sugar  production,  that  it  is  scarcely  worth 
while  at  this  moment  to  discuss  the  subject  farther  than  to 
say  that,  when  the  great  conflict  is  ended,  the  question  of  boun- 
ties probably  will  have  to  be  considered  again.  This  question 
was  temporarily  adjusted  by  the  International  Convention  signed 
by  Austria-Hungary,  Belgium,  France,  Germany,  Great  Britain, 
Italy,  the  Netherlands,  Spain  and  Sweden,  at  Brussels,  March  5, 
1902,  by  which  it  was  agreed  that,  so  long  as  the  convention 
lasted,  all  bounties  direct  and  indirect,  on  the  production  or  ex- 
portation of  sugar,  should  be  abolished.  In  this  stipulation  there 
was  assimilated  to  sugar  the  products  thereof,  such  as  confitures, 
chocolates,  biscuits,  condensed  milk,  and  all  other  analogous 

i  For  fuller  details,    see  Commerce   Report,  No.  230,  October   1,    1915,   Bureau   of 
Foreign  and  Domestic  Commerce,  Department  of  Commerce. 

248 


The  International  Situation  and  Future  Trade  Relations 

products  containing  a  notable  proportion  of  artificially  incor- 
porated sugar.  A  permanent  commission  was  established  to 
supervise  the  execution  of  the  provisions  of  the  convention.  By 
a  protocol  signed  March  17,  1912,  the  convention  was  continued 
in  force  till  August  31,  1918,  but  it  has  been  shattered  by  the 
war.  In  this  relation  we  may  note  the  fact  that,  by  the  existing 
Tariff  Act  of  October  3,  1913  (Section  IV  E),  it  is  provided 
that,  whenever  any  country  or  political  division  thereof  shall 
pay,  directly  or  indirectly,  any  bounty  or  grant  on  the  exportation 
of  any  article  that  is  dutiable  under  the  act,  there  shall  be  levied 
on  such  article,  on  its  importation  into  the  United  States,  even 
though  it  may  have  been  changed  by  manufacture  or  other- 
wise, an  additional  duty  equal  to  the  net  amount  of  such  bounty. 
For  the  purpose  of  determining  such  net  amount,  the  Secretary 
of  the  Treasury  is  empowered  to  make  all  needful  regulations. 

Shipping  and  Seamen 

A  question  agitating  the  public  mind  at  present  is  that  of 
shipping  and  seamen,  and  particularly  the  effect  upon  our  carry- 
ing trade  of  the  so-called  La  Follette  Act,  or  Seamen's  Act,  of 
March  4,  1915. 

Since  the  breaking  out  of  the  war  in  Europe,  freight  rates 
have  necessarily  been  high  and  space  has  often  been  difficult  to 
obtain.  This  is  due  not  only  to  the  destruction  of  merchant 
ships  by  the  belligerents,  but  also  to  the  circumstance  that  many 
ships  have  been  requisitioned  by  their  governments  for  service 
as  transports.  The  Government  of  the  United  States  endeavored 
to  meet  the  emergency  in  the  first  instance  by  the  act  of  August 
18,  1914,  which,  with  a  view  to  facilitate  the  admission  of  for- 
eign-built ships  to  American  registry,  empowered  the  President 
to  suspend  the  provisions  of  our  navigation  laws,  requiring  all 
watch  officers  of  American  vessels  in  foreign  trade  to  be  citizens 
of  the  United  States  and  prescribing  certain  conditions  of  survey, 
inspection  and  measurement.  By  an  executive  order  dated  Sep- 
tember 4,  1914,  the  provision  as  to  watch  officers  was  suspended 
for  seven  years,  except  that  a  vacancy  occurring  after  two  years 
must  be  filled  by  a  citizen  of  the  United  States,  while  the  pro- 
vision as  to  survey,  inspection  and  measurement  was  suspended 
for  two  years.  During  the  six  months  following  the  issuance  of 
this  order,  133  foreign-built  vessels  of  475,524  gross  tons  were 
admitted  to  American  registry.  The  rate  of  accession  has  since 
declined;  but  it  is  proper  to  bear  in  mind  that  many  of  the 

249 


Fourth*  Session —  Tuesday  Morning 


vessels  at  first  admitted,  being  the  property  of  foreign  corpora- 
tions owned  or  controlled  by  American  capital,  would  perhaps  long 
previously  have  been  transferred  to  American  registry,  had  the 
navigation  laws  permitted  it,  and  that  the  number  of  vessels  for 
sale  is  limited. 

Seamen's  Act  and  the  War 

The  Seamen's  Act  is  not  a  product  of  the  war.  It  had  long 
been  pending  in  Congress.  But,  as  it  materially  modifies  the 
conditions  that  existed  after  the  passage  of  the  act  of  August 
18,  1914,  and  the  promulgation  of  the  executive  order  of  the 
following  month,  and  gives  immediate  effect  to  certain  require- 
ments of  the  International  Convention  for  Safety  at  Sea  in  ad- 
vance of  their  enforcement  by  competing  nations,  it  has  been 
strongly  assailed.  Apart  from  the  provision  of  the  act,  which 
requires  the  carrying  of  a  greater  number  of  deck  hands,  rated 
as  "able  seamen,"  than  the  laws  of  other  countries  exact,  the 
clauses  chiefly  attacked  are  Section  13,  which  requires  75  per 
cent,  of  the  crew  in  each  department  to  be  able  to  understand 
any  order  given  by  the  officers,  and  Section  14,  which  contains 
certain  requirements  as  to  life-saving  equipment  and  the  manning 
of  such  equipment.  Section  13  took  effect  as  to  American  ves- 
sels on  November  4,  1915,  and  is  to  take  effect  as  to  foreign 
vessels  on  March  4,  1916.  By  a  circular  of  the  Secretary  of 
Commerce  of  September  18,  1915,  the  language  requirement  in 
Section  13  is  construed  to  embrace  only  "necessary  orders"  given 
to  the  members  of  the  crew  in  each  department  "in  the  course 
of  the  performance  of  their  duties,"  and  such  orders  as  may  be 
"normally"  given  to  them  "in  the  course  of  the  usual  performance 
of  their  regular  duties."  By  another  circular  of  the  Secretary  of 
Commerce,  dated  September  24,  1915,  and  based  on  opinions  of 
the  Attorney-General  and  the  Commerce  Department's  Solicitor, 
it  is  stated  that  Section  14,  while  applying  on  and  after  Novem- 
ber 4,  1915,  to  other  American  vessels,  will  not  apply  to  vessels 
registered  under  the  Act  of  August  18,  1914,  till  September  4, 
1916;  that  it  will  not  apply  at  any  time  to  foreign  steamers 
carrying  passengers  to  the  United  States;  and  that  it  will  not 
apply  to  foreign  steamers  carrying  passengers  from  the  United 
States  under  the  flags  of  countries  whose  inspection  laws  approxi- 
mate those  of  the  United  States  and  that  have  entered  into 
reciprocal  relations  with  the  United  States.  Such  countries  are 
said  to  be  Denmark,  France,  Germany,  Great  Britain,  Canada, 

250 


The  International  Situation  and  Future  Trade  Relations 

New  South  Wales,  New  Zealand,  Japan,  the  Netherlands,  and 
Norway. 

Government  Ownership  of  Vessels 

With  a  view  to  meet  conditions  produced  by  the  war  as  well 
as  by  legislation,  the  formation  of  a  corporation,  or  of  corpora- 
tions, controlled  and  financially  backed  by  the  government,  for 
the  purpose  of  purchasing  or  building  ships,  and  running  them, 
has  been  proposed.  This  proposal  formed  the  subject  of  acute 
controversy  during  the  last  session  of  Congress,  and  is  to  be 
renewed  in  the  present  session,  not  only  on  commercial  grounds, 
but  in  connection  with  the  movement  for  the  enlargement  and 
increased  preparedness  of  the  navy. 

Into  the  merits  of  this  controversy  it  is  not  my  purpose  now 
to  enter.  It  is,  I  believe,  generally  agreed  that  the  multiplication 
of  merchant  vessels  under  the  American  flag  is  desirable.  Nor 
do  I  understand  it  to  be  maintained  that  this  great  end  can  be 
secured  except  under  a  system  that  will  in  the  long  run  enable 
ships  to  be  profitably  employed  in  transportation.  Referring  to 
this  aspect  of  the  pending  proposal,  with  which  he  is  so  promi- 
nently identified,  the  Secretary  of  the  Treasury,  in  his  speech 
at  Indianapolis,  October  13,  1915,  expressly  declared:  "We 
could  prove  the  falsity  of  the  claim  that  ships  cannot  be  operated 
under  the  American  flag  at  a  profit."  On  this  demonstration  the 
permanency  of  any  policy  in  regard  to  the  merchant  marine 
would  no  doubt  largely  depend. 

Trade  with  South  America 

In  the  public  prints  our  commercial  relations  with  the  coun- 
tries of  Central  and  South  America  have  occupied,  during  the 
past  year,  a  large  amount  of  space.  Discussion  has  been  rife; 
conferences  have  been  held  and  movements  organized  to  promote 
interest  and  activity  in  the  subject.  It  is  not  my  desire  to  seem 
to  assume  a  critical  attitude.  Our  mercantile  community  can 
hardly  be  expected  to  devote  itself  exclusively  to  one  subject, 
nor  can  a  great  trade  be  built  up  in  a  day.  Nevertheless,  I  ven- 
ture to  ask  whether  we  have  as  yet  shown  a  capacity  fully  to 
meet  the  situation  in  the  countries  to  the  south  of  us?  Com- 
mercially speaking,  those  countries  are  in  the  dawn  of  their 
development.  Some  are  indeed  far  more  advanced  than  others, 
but  they  are  all,  from  the  industrial  point  of  view,  comparatively 
new.  They  therefore  need  what  all  other  developing  countries 
need,  what  the  United  States  has  constantly  needed  and  bounti- 

251 


Fifth"7  Session — Tuesday"  Afternoon 


fully  obtained,  namely,  money  and  credit.  Unless  we  can  furnish 
them  with  these  absolute  essentials,  we  shall  lose  the  opportunity 
which  present  conditions  offer,  and  at  the  end  of  the  war  their 
trade  and  finance  will  revert  to  former  channels.  European  mer- 
chants and  European  bankers  will  again  control  the  course  of 
commerce,  and  the  United  States  will  be  obliged  to  compete 
under  conditions  adverse  to  success.  For  these  reasons,  I  would 
strongly  and  earnestly  impress  upon  all  persons  interested  in  for- 
eign commerce  the  importance  of  learning  accurately  the  needs 
of  the  countries  to  the  south  as  understood  by  their  governments, 
some  of  which  are  large  purchasers  of  various  supplies,  as  well 
as  by  their  bankers  and  merchants,  and  of  endeavoring  by  all 
possible  means  to  meet  those  needs  without  delay. 


THE  CHAIRMAN  :  Gentlemen,  Lam  sure  that  we  have  all  been 
instructed  greatly  to  our  benefit  in  listening  to  this  remarkable 
address  of  Mr.  Moore's. 

We,  as  business  men,  are  not  very  much  disposed  to  look 
at  that  side  of  the  question;  but,  from  what  he  says,  we  can 
see  how  interesting  it  is  becoming,  and  how  necessary  it  is  for 
us  to  study  it  and  to  be  governed  in  some  degree  by  it. 

The  meeting  will  now  stand  adjourned  until  two  o'clock 
this  afternoon. 

Whereupon,  at  12:40  P.M.,  a  recess  was  taken  until  2  P.M. 


FIFTH   SESSION 

Tuesday  Afternoon,  December  7,  1915 

The  Conference  was  called  to  order  at  2:15  P.M.,  Mr. 
Theodore  C.  Search  in  the  chair. 

THE  CHAIRMAN:  Ladies  and  Gentlemen,  the  session  this 
afternoon  will  be  opened  by  two  gentlemen  who  are  going  to  tell 
us  something  about  the  commerce  of  the  Levant,  Mr.  J.  Wylie 
Brown,  executive  secretary  of  the  American  Chamber  of  Com- 
merce for  the  Levant,  which  has  its  home  office  in  Constantinople 
and  branches  in  other  cities  of  the  Levantine  countries,  and  Mr. 
Robert  C.  Rindelaub,  who  has  been  established  for  a  considerable 
time  in  Constantinople  as  an  import  and  export  merchant. 

I  have  the  pleasure  of  introducing  to  you  as  the  first  speaker 
Mr.  J.  Wylie  Brown,  executive  secretary  of  the  American  Cham- 
ber of  Commerce  for  the  Levant. 

252 


American  Relations  with  the  Near  East 


American  Relations  with  the  Near  East 
By  J.  WYLIE  BROWN, 

Secretary,  American  Chamber  of  Commerce  for  the  Levant. 

The  trade  of  the  Near  East,  or  Levant,  has  played  a  very 
important  role  in  the  history  of  the  world's  commerce,  and  to 
control  this  trade  has  been  the  ambition  of  almost  every  great 
world  power. 

In  the  fifteenth  century,  following  the  conquest  of  Con- 
stantinople by  the  Turks,  Columbus  set  out  in  search  of  a  sea 
route  to  India,  which  resulted  in  the  discovery  of  America.  This 
drew  the  world's  attention  westward,  so  that  in  time  the  fertile 
lands  that  had  been  the  world's  granaries  for  centuries  became 
the  pastures  and  sheepfolds  of  nomad  tribes,  and  the  ships  of 
the  nations  soon  forsook  the  Near  East  ports. 

But  this  state  of  affairs  was  not  to  be  a  permanent  one. 
Ultimately  the  pendulum  began  to  swing  backward.  The  Suez 
Canal  was  opened.  Eastbound  railroads  were  built,  seeking  out- 
lets of  the  Mediterranean  and  Black  seas,  and  again  the  ships  of 
various  flags  were  seen  in  the  ports  of  the  Levant.  Places  that 
were  mud  villages  and  Arab  encampments  along  the  Eastern 
Mediterranean  fifty  years  ago  have  sprung  into  modern  cities  of 
one  and  two  hundred  thousand  population,  with  paved  streets, 
electric  lights,  tramways  and  telephones.  Everywhere  the  spirit 
of  progress  is  felt,  and  the  theory  of  an  unchanging  and  un- 
changeable East  can  no  longer  be  applied  to  those  countries.  A 
renaissance  is  now  going  on  there  similar  to  that  obtaining  in 
Japan  during  the  latter  half  of  the  century.  And  no  force  will 
be  able  to  stop  this  onward  march  to  progress.  Wars  and  po- 
litical changes  can  only  delay  it  temporarily.  It  is  the  general 
feeling  out  there  that  when  this  war  is  over,  no  matter  who  is 
victorious,  the  Near  East  will  have  an  era  of  peace  for  two  or 
three  generations  at  least,  and  an  age  of  wonderful  development 
will  ensue. 

Industrial  Developments 

In  spite  of  their  antiquity  these  are  new  countries  exceed- 
ingly rich  in  natural  resources.  You  are  familiar  with  the  trans- 
formation that  is  going  on  in  Egypt.  The  recent  wars  have  re- 
vealed the  progress  and  strength  of  the  Balkan  States.  Turkey, 
in  the  last  decade,  has  also  seen  the  beginning  of  her  industrial 
"boom."  The  great  Mesopotamian  valley  drained  by  the  Eu- 
phrates and  Tigris  rivers  is  being  irrigated  and  reclaimed.  Irriga- 

253 


Fifth  Session — Tuesday  Afternoon 


tion  works  on  a  large  scale  have  been  completed  near  Konia. 
The  Constantinople-Bagdad  Railroad  can  be  completed  in  a  com- 
paratively short  time.  And  many  small  railroads  have  been  built 
in  Asia  Minor  and  Syria  connecting  the  larger  ports  with  the 
rich  interior  sections.  In  Constantinople  as  well  as  other  large 
cities  electric  lights,  electric  street  railways  and  telephone  sys- 
tems have  been  installed.  However,  this  is  only  a  beginning. 
More  railroads  are  urgently  needed  in  Asia  Minor  and  Macedonia. 
Numerous  ports  and  docks  must  be  constructed.  Other  cities 
are  eager  for  electric  lights  and  tramways.  All  these  new  en- 
terprises will  offer  attractive  and  guaranteed  profits  to  foreign 
investors. 

The  relative  importance  of  the  possibilities  and  opportuni- 
ties for  American  commercial  expansion  which  the  Levant  offers 
is  not  generally  realized  in  the  United  States.  The  Levant,  or 
Near  East,  comprises  Greece,  Turkey,  Egypt  and  the  Balkan 
States.  Here  we  have  a  section  of  the  world  with  an  area  of 
1,685,860  square  miles,  larger  than  all  Europe  excepting  Russia, 
with  a  population  of  55,000,000  and  with  an  annual  import  trade 
amounting  to  $500,000,000,  greater  by  $150,000,000  than  that  of 
China.  Is  not  a  share  of  this  trade  worthy  of  our  most  serious 
efforts  ? 

American  relations  with  the  Near  East  have  been  principally 
missionary  and  educational.  Our  flag  in  those  countries  has 
been  seen  flying  over  school  buildings  and  hospitals  rather  than 
ships  of  commerce.  There  are  ten  American  colleges  and  nu- 
merous smaller  schools  of  various  kinds  located  in  Turkey  alone. 
These  schools  and  colleges  have  been  spreading  the  English 
language,  teaching  different  industries  to  the  natives  and  giving 
out  much  knowledge  of  American  industries  and  products.  Our 
teachers,  as  well  as  the  returning  emigrants,  have  done  much  to 
pave  the  way  for  American  commerce  in  the  Near  East. 

However,  previous  to  our  war  with  Spain,  which  marked  the 
beginning  of  the  age  of  expansion,  our  trade  with  Turkey  and  the 
Balkan  States  continued  in  an  embryonic  state.  American  ex- 
ports to  Turkey  in  round  figures  amounted  to  $50,000  in  1891, 
$500,000  in  1901,  and  to  $5,000,000  in  1911.  Our  imports  from 
Turkey  grew  from  $4,900,000  in  1892  to  $7,500,000  in  1901  and 
$20,000,000  in  1911.  A  similar  growth  has  taken  place  with  the 
other  countries  of  that  section.  The  articles  exported  from 
America  to  the  Levant  in  normal  times  are  cotton  seed  oil,  oleo 
oil,  petroleum,  agricultural  machinery,  hardware,  iron  and  steel 

254 


American  Relations  with  the  Near  East 


products,  furniture,  rubber  shoes,  leather,  leather  shoes,  cotton 
goods,  starch  and  glucose,  pumps,  marine  engines  and  motors, 
coal,  lumber,  flour,  building  supplies,  automobiles  and  trucks, 
bags,  carriages,  cement,  cordage,  clocks,  canned  groceries,  drugs 
and  medicines,  electric  appliances,  lamps  and  lighting  devices, 
metal  bedsteads,  typewriters,  lubricating  oils,  paints  and  varnishes, 
musical  instruments,  photographic  supplies,  playing  cards,  station- 
ery, radiators  and  refrigerators. 

We  import  from  this  section  carpets  and  rugs,  cigarette  to- 
bacco, currants,  figs  and  raisins,  opium,  wool,  skins,  mohair, 
licorice  root,  cotton  lace,  attar  of  roses,  emery  stone,  nuts  and 
seeds,  casings,  olives  and  olive  oil,  marble  and  bazar  goods. 

In  normal  times  we  buy  from  the  Near  East  about  $42,- 
000,000  worth  of  goods.  Yet  we  are  content  to  sell  these  coun- 
tries less  than  $10,000,000  worth  of  our  products.  This  balance 
is  greatly  against  us.  In  other  words,  of  their  imports  of  $500,- 
000,000  we  sell  them  less  than  one  and  one-half  per  cent.  But 
these  figures  can  be  radically  changed  in  the  future  if  we  are 
willing  to  seriously  go  after  the  trade.  Including  approximately 
the  sum  of  $13,000,000  paid  to  the  United  States  for  two  battle- 
ships our  exports  to  Greece  for  1914  amounted  to  $30,000,000. 
And  during  the  present  year  we  have  been  selling  Greece, 
monthly,  $3,000,000  worth  of  our  goods.  Since  the  war  began 
we  have  been  sending  to  Greece  and  Egypt  almost  every  kind  of 
article  from  locomotives  to  shoe  polish. 

This  increase  of  trade  has  come  to  us  partially  because  of 
our  own  efforts  to  secure  it,  but  largely  as  a  result  of  the  general 
war.  What  per  cent,  of  this  trade  we  shall  hold  and  to  what 
extent  we  shall  increase  our  trade  in  the  other  countries  when 
peace  returns  will  largely  depend  on  the  American  manufacturer, 
exporter  and  banker.  Shall  we  consider  immediate  profits  only, 
continue  to  quote  f.  o.  b.  New  York  and  stay  in  the  bounds  of  our 
own  country,  or  shall  we  seriously  and  intelligently  prepare  our- 
selves commercially  for  the  share  of  the  Near  East  trade  that 
is  justly  ours? 

Feeling  Toward  the  United  States 

Today  the  people  throughout  the  Near  East  feel  very  friend- 
ly toward  the  United  States  and  they  are  looking  to  us  for 
commercial  help — the  one  great  neutral  nation  that  they  believe 
will  be  able  to  supply  their  future  needs.  The  commercial 
strength  of  America  is  better  known  today  than  ever  before  by 
the  people  of  Greece,  Egypt,  Turkey  and  the  Balkan  States. 

255 


Fifth  Session — Tuesday  Afternoon 


However,  if  we  are  to  control  the  markets  in  the  Near  East 
in  the  large  number  of  lines  in  which  we  excel,  certain  facilities 
for  marketing  our  goods  in  that  section  must  be  brought  about. 
The  Levant  is  a  distinct  territory  with  very  different  conditions 
from  those  obtaining  in  the  highly  developed  countries  of  Europe, 
importing  its  manufactured  goods  and  exporting  its  raw  ma- 
terials. Therefore,  to  attempt  to  handle  this  trade  through  agents 
in  Hamburg  and  in  London  is  fatal  to  our  future  with  that 

section. 

What  the  Trade  Needs 

Time  does  not  permit  my  dwelling  on  the  needs  of  our 
trade  with  the  Levant.  Therefore  I  shall  only  mention  them. 
Better  banking  facilities  stand  first  among  these  needs.  A  num- 
ber of  our  banks  already  have  direct  connections  with  Greek 
banks,  as  a  result  of  the  war.  But  we  greatly  need  American 
banks  out  there.  Germany,  England,  France  and  even  Russia, 
Italy  and  Greece  have  had  their  banks  in  Constantinople  for  a 
number  of  years.  Cannot  American  bankers  give  similar  sup- 
port to  the  American  manufacturers  and  exporters  ? 

Also  capital  will  be  much  needed  in  the  countries  of  the 
Near  East  after  the  war.  American  investments  will  be  thrice 
welcomed  in  that  section,  because  it  is  well  known  that  no  political 
string  will  be  thereto  attached.  An  American  industrial  or  in- 
vestment bank  in  Constantinople,  with  branches  in  the  surround- 
ing centers,  would  no  doubt  find  a  rich  and  profitable  field  of 
operation.  That  trade  follows  investment  needs  no  proof. 

Just  previous  to  the  outbreak  of  the  present  war  there  was 
a  direct  and  regular  steamship  line  between  New  York  and  Con- 
stantinople with  Hamburg-American  steamers,  making  the  trip 
in  nineteen  days.  There  were  other  lines  between  New  York 
and  Philadelphia  and  the  eastern  Mediterranean  ports.  We  are 
assured  by  the  companies  that  these  lines  will  again  be  in  opera- 
tion as  soon  as  the  trade  routes  to  the  Black  Sea  are  opened  up. 
In  the  early  part  of  the  nineteenth  century  the  Stars  and  Stripes 
was  one  of  the  best  known  flags  in  these  waters  and  its  return 
would  be  very  welcome  indeed. 

As  a  further  means  of  closer  trade  relations  with  the  Near 
East  it  is  highly  desirable  that  the  American  manufacturers  be- 
come personally  acquainted  with  these  countries  and  their  people. 
American  exporters  would  find  it  profitable,  I  think,  to  come  out 
and  look  over  the  field,  visit  the  leading  ports  and  place  samples 
of  their  goods  on  exhibition.  In  this  connection  a  commercial 

256 


Sweden — John  Aspegren 


excursion  of  American  manufacturers   into  the  Mediterranean 
is  strongly  recommended. 

The  American  Chamber  of  Commerce  for  the  Levant  was 
organized  in  March,  1911,  for  the  purpose  of  fostering  Amer- 
ican trade  with  the  Near  East.  It  now  has  more  than  six  hun- 
dred members,  composed  of  reliable  importers  and  exporters 
in  the  Levant  on  the  one  hand  and  American  firms  on  the  other. 
Its  headquarters  are  located  in  the  field  at  Constantinople,  with 
branches  at  Athens,  Salonika,  Patras,  Greece ;  Smyrna  and  Beirut, 
Turkey ;  Bucharest,  Roumania ;  and  is  now  organizing  branches  in 
the  larger  cities  in  the  United  States.  The  Chamber  steps  in 
where  the  consul  must  stop,  that  is,  where  the  question  of 
agencies,  or  of  credit,  becomes  personal  and  of  practical  and  con- 
crete application.  It  is  a  patriotic  organization  with  the  execu- 
tive officers  and  a  majority  of  the  directors  American,  doing  com- 
mercial missionary  work  for  America's  foreign  trade. 


THE  CHAIRMAN  :  Gentlemen,  it  was  agreed  between  Mr. 
Brown  and  Mr.  Rindelaub  that  if  either  of  them  consumed  more 
than  five  minutes  in  their  presentation  the  other  would  not  claim 
recognition  at  this  time.  As  a  matter  of  fact,  nearly  fifteen 
minutes  have  elapsed  and  we  shall  have  to  ask  Mr.  Rindelaub 
to  give  way  at  this  time. 

I  wish,  now,  to  introduce  to  you  Mr.  John  Aspegren,  repre- 
senting the  General  Export  Association  of  Sweden. 

Address  of  Mr.  John  Aspegren 

Representing  the  General  Export  Association  of  Sweden 

MR.  ASPEGREN  :  Gentlemen,  I  can  readily  perceive  that  after 
you  have  heard  from  all  these  foreign  countries  you  will  know 
so  much  about  them  that,  with  the  intense  and  strenuous  methods 
of  American  manufacturers,  I  would  be  more  than  surprised  if 
you  did  not  capture  the  entire  trade  of  Europe,  Asia  and  Africa. 

There  is  one  country  that  you  have  not  heard  from  as  yet, 
and  while  I  received  the  call  only  two  days  ago  to  represent  the 
General  Export  Association  of  Sweden  and  to  tell  you  a  little  bit 
about  Sweden,  I  have  not  had  the  necessary  time  to  prepare  for 
you  any  statistics.  At  the  same  time  I  am  consoled  in  knowing 
that  you  would  not  have  had  time  to  listen  to  them  either, 
because  the  time  is  very  short  here;  but  I  think  I  can  give  you 
in  a  few  minutes  a  general  idea  of  Sweden  and  what  you  could 
capture  there. 

257 


Fifth  Session — Tuesday  Afternoon 


Changed  Conditions  in  Sweden 

Before  the  war  things  were  entirely  different  in  most  coun- 
tries from  what  they  are  now.  That  was  the  case  with  Sweden. 
Sweden  used  to  buy  the  products  it  needed,  or  a  larger  part  of 
them,  from  England,  Russia  and  Germany.  Small  portions  came 
from  other  countries ;  some  from  America.  What  she  bought  from 
America  was  shipped  from  here  to  Sweden  through  such  ports 
as  Liverpool  and  Hamburg.  The  trade  was  mostly  handled  by 
foreign  business  men  who  had,  naturally,  no  interest  in  pushing 
American  goods  and  did  not  do  it  unless  they  were  absolutely 
unable  to  supply  what  was  wanted  from  their  own  countries. 

Since  the  war  things  have  changed  entirely.  Sweden  can  no 
longer  get  her  foodstuffs  from  Russia.  She  gets  them  from 
America  now.  She  can  no  longer  get  her  coal  from  England,  or 
at  least  in  a  very  small  degree.  Strange  as  it  may  appear  over 
here,  she  gets  most  of  it  from  Germany  now.  Why  should  not 
America  supply  it? 

A  great  part  of  the  manufactured  goods  used  in  Sweden 
formerly  came  from  England  and  Germany.  You  know  that 
every  man  is  needed  in  those  countries  today  and  has  no  time  to 
turn  out  anything  for  foreign  countries.  Here  is  your  field,  gen- 
tlemen; and,  as  is  the  case  with  importations  into  Sweden  from 
other  countries,  you  will  find  the  same  state  of  affairs  with  ex- 
ports from  Sweden.  She  used  to  sell  her  surplus  of  various 
goods,  raw  materials  as  well  as  finished  products,  to  the  same 
three  countries.  Today  she  cannot  trade  with  Russia,  except  in 
a  small  wray,  because  Germany  controls  the  Baltic.  As  far  as 
selling  to  Germany  and  England  is  concerned,  I  suppose  certain 
small  goods  can  still  be  sold  and  shipped  there;  but  the  time 
may  come  when  neither  of  those  countries  will  be  able  to  pay  for 
them.  Their  currency  is  steadily  depreciating. 

Sweden's  Resources  in  Raw  Material 

You  gentlemen  used  to  buy  in  England  and  Germany  large 
quantities  of  raw  material  as  well  as  finished  products,  but  you 
cannot  get  them  now.  Sweden  has  great  resources  in  raw  ma- 
terials. Even  now  she  has  large  quantities  of  the  finest  pig  iron 
in  the  world,  which  is  finding  its  way  from  Sweden  to  Phila- 
delphia in  ever-increasing  quantities. 

Wood  pulp  you  used  to  get  from  Canada,  and  it  is  now  in 
very  large  degree  coming  from  Sweden,  and  is  of  a  higher  grade 
than  the  Canadian. 

258 


Sweden — John  Aspegren 


Swedish  iron,  being  comparatively  free  from  sulphur,  has 
been  used  for  the  finest  products  all  over  the  world.  The  well- 
known  English  steel  is  very  largely  made  from  Swedish  pig  iron. 

In  the  same  way  you  will  find  that  Sweden,  as  an  industrial 
country,  is  working  along  the  same  lines  as  Germany  and  England. 
What  you  used  to  get  in  those  countries  you  will  have  no  trouble 
in  finding  in  Sweden  today. 

I  shall  not  go  into  various  details.  I  will  simply  mention 
that  in  New  York  there  exists  an  organization  called  the  Swedish 
Chamber  of  Commerce,  which  will  be  glad  to  give  you  details  in 
regard  to  everything,  and  it  can  give  you  all  those  details  so  that 
you  can  capture  the  trade  of  Sweden,  as  well  as  other  countries : 
something  which  you  are  going  to  proceed  to  do  from  tomorrow 
on.  (Laughter  and  applause.) 

Scandinavia  consists  of  three  countries:  Sweden,  Norway 
and  Denmark.  Of  the  three,  Sweden  is  the  largest  one  in  popu- 
lation as  well  as  in  area.  It  may  interest  you  to  know  that  the 
area  of  Sweden  is  not  very  far  behind  that  of  Germany.  So  that 
you  see  you  have  plenty  of  territory;  and,  while  Sweden  has 
suffered  from  lack  of  capital  in  the  past,  the  development  in  all 
lines  during  the  past  fifteen  years  has  been  so  great  that  she  is  now 
able  to  take  care  of  her  own  business  without  the  help  and 
assistance  of  Germany  or  England ;  but  she  would  welcome  yours. 

We  are  now  having  direct  steamship  lines,  which  we  did  not 
have  before;  and,  at  the  end  of  this  month,  the  first  great  pas- 
senger steamer,  Stockholm,  of  18,000  tons'  capacity,  arrives  here ; 
so  that  from  now  on  we  shall  not  suffer  from  lack  of  facilities 
at  all. 

Ladies  and  gentlemen,  I  realize  how  quickly  the  time  is 
passing  and  how  much  there  is  to  do  here ;  how  many  people  de- 
sire to  speak,  and  I  am  not  going  into  details;  but  there  is  one 
thing  that  I  do  not  want  to  forget,  before  I  leave,  and  that  is, 
on  behalf  of  Sweden,  I  want  to  compliment  the  National  Asso- 
ciation of  Manufacturers  on  its  Trade  Conference  here  during 
the  last  three  days.  It  is  work  of  just  this  kind  that  makes  for 
progress  and  development  among  all  the  nations  of  the  world. 
It  is  work  of  just  this  kind  that  promotes  good  will  and  peace 
among  all.  (Applause.) 


THE  CHAIRMAN:  Is  Mr.  Carrasco  in  the  audience?     He 
does  not  appear  to  be  here. 

259 


Fifth  Session — Tuesday  Afternoon 


Gentlemen,  the  next  speaker  who  will  address  us  is  Mr. 
Ernest  E.  Ling,  manager  of  the  Foreign  Trade  Department  of 
the  National  City  Bank  of  New  York,  a  position  to  which  he  was 
promoted  recently  on  account  of  his  important  services  to  that 
institution.  He  has  lately  come  back  from  South  America,  where 
he  has  rendered  services  in  the  branches  of  the  bank  in  Argentina 
and  Uruguay.  He  is  especially  conversant  with  the  subject  of 
his  paper  and  will,  in  a  few  words,  talk  to  you  about  the  subject 
of  foreign  branches  of  American  national  banks.  (Applause.) 

Address  of  Mr.  Ernest  E.  Ling 

MR.  LING  :  Mr.  Chairman,  Ladies  and  Gentlemen :  This  paper 
before  you  on  foreign  branches  of  American  national  banks  con- 
tains some  information,  but,  with  the  chairman's  permission,  I 
shall  not  hew  very  close  to  the  line,  but,  rather,  talk  about  some 
impressions  gained  during  a  period  of  seven  months  in  a  very 
small  part  of  that  huge  continent,  South  America. 

The  Federal  Reserve  Act  opened  the  door  to  the  banker 
and  the  merchant  to  go  into  this  field  of  labor.  That  field  was 
and  is  being  worked  by  the  world's  most  experienced  bankers  and 
merchants.  Those  representative  bankers  and  merchants  have, 
by  long  experience  and  knowledge  of  the  political,  economic  and 
trade  conditions  and  customs  of  the  country,  gained  a  goodly  line 
of  customers;  and  those  customers  have  been  retained  by  satis- 
factory conduct  of  commercial  transactions  with  them. 

Furthermore,  they  enjoy  a  large  volume  of  trade  from  their 
investments  in  those  countries,  which  we  have  no  right  to,  because 
we  have  not,  so  far,  invested  in  the  countries  and  enabled  them 
to  develop  their  huge  natural  resources. 

Through  those  investments  they  have  been  able  to  introduce 
their  goods  into  the  foreign  market,  and  the  foreigners  are  con- 
versant with  the  nature  of  their  goods  and  an  entente  cordiale 
has  been  established. 

Such  is  the  condition  which  faces  the  United  States  banker 
and  merchant  at  the  present  time.  It  is  a  fairly  easy  thing  to 
make  laws  which  say  you  may  go  to  work;  but  it  is  a  very 
difficult  thing  to  know  how  to  go  to  work.  Temporarily,  on 
account  of  the  preoccupation  of  the  European  countries,  there  is 
an  opportunity  presented  to  us  of  which  we  should  take  the 
utmost  advantage. 

260 


Foreign  Branches  0}  American  National  Banks 

Discriminating  Buyers 

No  one  can  have  gone  down  into  those  large  cities,  Buenos 
Aires  particularly,  and  have  seen  the  highly  developed  sales  or- 
ganizations belonging  to  those  high-grade  houses,  and  had  ex- 
perience of  the  buying  ability  of  those  people  without  being  im- 
pressed. They  are  undoubtedly  the  most  discriminating  buyers  in 
existence  in  this  section  of  the  world.  They  have  the  experience 
of  the  European  markets  and  the  experience  of  this  market  too, 
to  a  certain  extent,  so  that  we  cannot  expect  to  deliver  them  any 
goods  except  those  which  are  "according  to  Hoyle." 

I  noticed,  in  talking  to  a  number  of  those  people,  that  there 
was  a  great  lack  of  knowledge  on  their  part  of  the  extent  of 
our  manufacturing  plants.  They  constantly  expressed  surprise 
when  they  were  told  about  the  manufacturing  establishments 
that  we  have. 

No  doubt  a  good  deal  of  work  can  be  done  by  merchants 
actually  sending  their  representative  down  there  and  by  the 
banks  and  merchants  making  a  widespread  campaign  to  inform 
them  what  we  have  here  in  the  way  of  manufacturing  estab- 
lishments and  what  goods  we  can  deliver. 

We  had  an  opportunity  in  our  branches,  which  are  now  es- 
tablished in  Rio  Janeiro,  Sao  Paulo,  Santos,  Montevideo  and 
Buenos  Aires,  to  come  into  contact  with  a  number  of  repre- 
sentatives of  American  houses;  in  fact,  we  could  pretty  well  be 
sure  that  an  hour  or  two  after  a  steamer  arrived  at  any  one 
of  those  places  those  representatives  would  be  in  the  bank. 
We  got  a  good  deal  of  valuable  information  from  them,  and  we 
hope  we  were  able  to  give  them  some  useful  information  in 
return. 

For  instance,  they  would  come  in  and  they  would  want  to 
know  what  the  condition  of  the  trade  was  in  their  own  particular 
line  and  who  were  the  people  who  would  be  the  most  likely 
buyers,  and  what  the  credit  standing  of  those  people  was. 

We  have  not  been  established  very  long  there,  and  we,  of 
course,  have  experienced  very  great  difficulty  in  compiling  such 
information;  but  we  have  made  some  headway  by  courtesy  and 
patience.  This  information  saved  many  a  representative  much 
time  and  money  because  it  directed  him  into  proper  channels. 

Selection  of  the  Representative 

We  have  made  some  headway,  and  were  able  to  give  them 
some  information.  It  is  only  by  such  cooperation  between  the 

261 


Fifth  Session — Tuesday  Afternoon 


banker  and  the  merchant  that  any  great  headway  can  be  made. 
As  a  general  rule  a  competent,  earnest  representative  going  down 
there,  with  an  honest  and  good  line  of  materials,  will  not  fail 
to  achieve  success  in  some  measure;  which  by  care  and  patience 
and  continuous  endeavor  may  ultimately  result,  we  hope,  in  satis- 
factory trade  for  the  future. 

There  is  undoubtedly  a  certain  degree  of  suspicion  and  dis- 
trust, probably  born  of  a  lack  of  knowledge  about  us,  in  the 
minds  of  a  good  many  of  the  people  in  that  part  of  South 
America.  There  may  be  some  good  reason  for  that.  We  have 
not  had  representatives  down  there  in  past  years  of  whom  we 
could  be  proud  or  boast ;  but  within  the  last  year  or  so,  there  has 
been  a  much  better  class  of  traveling  representatives  sent  down 
there,  and  substantial  American  concerns  are  establishing  them- 
selves. 

For  instance,  the  Armour  Company  has  built  its  huge 
frigorifico  in  La  Plata.  Banks  and  the  Light  and  Power  people 
are  in  there,  and  of  course  we  have  had  the  Singer  Sewing  Ma- 
chine Company  and  others  there  for  years.  It  is  not  an  uncom- 
mon thing,  now,  to  hear  Latin-Americans  say:  "Well,  we 
didn't  know  what  the  characteristics  of  the  Americans  were  until 
recently";  and  they  look  with  a  good  deal  more  favor  upon  us. 

The  founding  of  an  American  Chamber  of  Commerce  at  Rio 
Janeiro  and  a  similar  organization  at  Buenos  Aires  are  significant. 
These  organizations  were  made  up  of  the  representatives  of 
American  houses,  and  they  have  brought  a  fine  lot  of  men  there. 

There  are  not  a  great  many  Americans  in  Rio  Janeiro,  only 
a  few  hundred  in  a  city  of  over  a  million;  and,  naturally,  the 
native  eyes  are  on  the  American,  to  see  what  he  does  and  what 
his  conduct  is;  and  in  just  the  same  way  that  he  conducts  him- 
self so  will  Latin-Americans  think  about  our  country. 

The  United  States  naturally  has  been  so  busy  in  the  develop- 
ment of  its  own  resources  that  perhaps  it  has  not  such  satisfactory 
knowledge  of  the  conduct  of  foreign  trade  as  the  Europeans 
have ;  but  having  built  up  a  domestic  commerce  which  is  twice  as 
big  as  the  value  of  all  the  foreign  commerce  of  all  the  countries 
of  the  world,  including  America,  there  is  very  little  doubt  but 
that,  if  they  apply  the  same  intelligence  and  integrity  to  the 
foreign  trade,  they  will  make  satisfactory  headway  there. 

Friendliness  the  Rule 

As  a  general  rule  the  foreigners  in  those  countries  are  dis- 
tinctly friendly.  It  was  my  privilege  to  talk  with  a  great  many 

262 


Foreign  Branches  of  American  National  Banks 

of  them,  and  I  found,  as  a  general  rule,  that  there  was  only 
one  thing  which  affected  them,  and  that  was:  "Can  I  buy  as 
good  goods  from  you  and  at  equal  prices  as  I  can  elsewhere? 
If  I  can,  then  it  is  for  me  to  choose;  but  if  I  can  buy  better 
goods  from  you  at  better  prices,  I  will  buy  from  you."  It  is 
all  a  question  of  money  making,  after  all.  There  may  be  a 
good  deal  of  politeness  and  suavity,  but  it  extends  down  to 
that  in  the  final  analysis. 

Our  work  has  proved  to  us  very  conclusively  that  no  mat- 
ter how  much  we  aim  to  provide  facilities  and  assistance,  or 
how  much  the  government  and  trade  organizations  aim  to  do, 
in  the  last  analysis  it  comes  down  to  the  merchant;  he  himself 
is  the  man  that  has  to  fire  the  shot.  It  can  only  be  done  by  him. 

There  is  no  royal  road  or  legerdemain  in  getting  foreign 
trade.  It  can  only  be  done  in  the  same  way  as  domestic  trade 
is  obtained.  And,  Mr.  Chairman,  ladies  and  gentlemen,  I  do  not 
believe  there  is  anything  more  to  say  except  that,  knowing  what 
our  merchants  have  done  in  domestic  trade,  we  need  have  very 
little  doubt  in  our  minds  that  if  they  do  the  same  for  foreign 
trade  they  will  not  capture  but  cultivate  more  business  and  get 
their  fair  share.  (Applause.) 

(Following  is  the  full  text  of  Mr.  Ling's  paper)  : 

Foreign  Branches  of  American  National  Banks 

By  ERNEST  E.  LING, 

Manager  the  Foreign  Trade  Department,  the  National  City  Bank  of  New  York 

European  banks  have  for  years  fostered  and  produced  for- 
eign trade  by  their  Branch  Bank  Systems — the  United  States 
has  not  had  the  facilities. 

Forty  English  banks  operating  in  foreign  countries  have 
1,325  branches  in  South  America;  five  German  banks  have  forty 
branches  and  five  English  banks  have  seventy  branches. 

These  South  American  foreign  banks,  and  their  branches, 
have  been  active  agencies  for  the  promotion  of  trade  relations 
between  the  South  American  Republics  and  their  home  countries. 
They  have  entered  actively  into  the  industrial  and  economic  lives 
of  the  communities  in  which  they  are  located.  They  have  been 
instrumental  in  building  up  markets  at  home  for  the  raw  ma- 
terials produced  by  South  America  and  in  developing  a  trade 
market  for  the  products  of  their  own  manufactures.  England 
and  Germany  have  put  into  Argentina,  Brazil  and  Uruguay  in 
the  last  25  years,  approximately  four  billion  dollars,  and  as  a 

263 


Fifth  Session — Tuesday  Afternoon 


result  enjoyed  before  the  war  broke  out,  46  per  cent,  of  the  total 
trade  of  these  three  counties. 

Prior  to  the  passage  of  the  Federal  Reserve  Act,  no  pro- 
vision existed  in  our  national  banking  laws  permitting  the  estab- 
lishment of  branches  in  foreign  countries.  It  is  true,  that  under 
the  laws  of  some  of  the  States,  banking  institutions  incorporated 
under  State  laws  might  do  business  in  foreign  countries.  There 
have  been  no  restrictions  either  upon  private  banking  firms  estab- 
lishing branches  for  foreign  business,  but  the  extension  of 
branches  of  State  banks  or  private  institutions  has  not  taken  place 
to  any  degree  because,  in  a  foreign  country,  as  can  be  readily 
seen,  a  branch  of  an  American  bank,  organized  under  other  than 
national  laws,  would  be  at  a  disadvantage  in  competing  with  the 
strong,  influential,  foreign  banks. 

The  Federal  Reserve  Act,  however,  has  made  it  possible  for 
branches  of  national  banks  to  be  established  in  foreign  countries, 
and  to  place  back  of  the  branches  the  prestige  and  resources  of 
the  parent  bank.  In  accordance  with  this  Act,  and  in  response 
to  the  very  active  interest  shown  by  business  men  in  all  parts  of 
of  the  United  States,  the  directors  of  the  National  City  Bank, 
in  June,  1914,  authorized  an  application  to  the  Federal  Reserve 
Board  for  the  privilege  of  establishing  a  branch  at  Buenos  Aires, 
Argentina,  and  one  at  Rio  de  Janeiro,  Brazil.  The  organization 
of  the  Federal  board  was  completed  in  August,  and  on  Septem- 
ber 2,  permission  was  granted  to  launch  these  two  branches. 

The  bank  had  already  sent  down  representatives  to  study 
the  situation  and  attend  to  the  innumerable  details  of  organiza- 
tion, and  on  September  26,  1914,  the  first  foreign  staff  ever  sent 
out  by  a  national  bank  of  the  United  States  sailed  from  New 
York  to  establish  a  branch  of  the  National  City  Bank  of  New 
York  in  Buenos  Aires,  Argentina,  which  was  formally  opened  in 
November.  In  February,  1915,  a  branch  was  established  in  Rio 
de  Janeiro,  and  branches  at  Santos  and  Sao  Paulo,  Brazil,  were 
opened  soon  after.  Early  in  August,  Montevideo,  Uruguay,  was 
added  to  the  list,  and  a  few  weeks  later  the  property  and  assets 
of  the  Banco  de  la  Habana,  Havana,  Cuba,  were  transferred  to 
the  National  City  Bank  of  New  York,  which  took  over  the  busi- 
ness of  that  bank  and  established  the  West  Indian  branch. 

Establishment  of  Dollar  Exchange 

Thus,  within  a  year,  the  National  City  Bank  established  six 
foreign  branches  in  South  America  and  this  has  given  rise  to  an 

264 


Foreign  Branches  of  American  National  Banks 

important  volume  of  direct  exchange  transactions,  the  immediate 
effect  of  which,  and  the  effect  most  important  to  the  commercial 
interests  of  the  United  States,  being  the  establishment  of  dollar 
exchange  upon  a  permanent  basis. 

The  pound  sterling  having  been  the  basis  of  values  the  world 
over  has  been  of  very  great  commercial  advantage  to  England. 
Our  people  who  have  sold  goods  to  South  America  have  hereto- 
fore been  obliged  to  accept  payment  in  pounds  sterling,  and, 
theoretically  at  least,  have  run  the  risk  of  two  exchanges  of 
money,  from  the  local  currency  into  the  pound  sterling  and  from 
the  pound  sterling  into  the  American  dollar.  When  the  exchange 
market  is  active  and  fluctuations  are  in  order  the  American  ex- 
porter has  been  obliged  to  pay  fairly  heavy  tribute  to  the  English 
bankers. 

Under  existing  conditions  in  the  New  York  money  market 
the  use  of  dollar  credits  is  proving  to  'be  very  attractive  to  the 
American  importer  as  the  medium  for  financing  his  importations. 
A  comparison  of  the  discount  rates  in  New  York  and  London  for 
prime  9O-day  bills  will  disclose  a  difference  in  favor  of  New 
York  of  3  to  3%  Per  cent-  Per  annum.  In  addition  to  this 
difference  in  interest,  there  is  also  a  difference  in  the  initial  cost 
in  the  form  of  commission  for  issuance  between  drafts  on  New 
York  in  dollars  and  drafts  on  London  in  pounds  sterling.  This 
difference  in  commission  in  favor  of  New  York  will  average 
one-half  per  cent,  per  annum.  Thus,  by  using  dollar  credits,  the 
importer  will  save,  in  commission  and  in  discount  or  interest, 
from  3^2  to  3^4  per  cent,  per  annum. 

Quite  apart  from  the  economy  to  the  individual  resulting 
from  the  use  of  dollar  credits,  is  the  broader  question  of  the 
economic  value  to  the  nation  as  a  whole  that  will  result  from  the 
designation  of  the  dollar  as  the  basis  of  value  in  our  credit  trans- 
actions with  the  rest  of  the  world.  Heretofore,  in  order  to  fin- 
ance the  movement  of  our  enormous  imports  we  have  had  to 
call  on  foreign  money  centers  to  furnish  us  with  the  necessary 
credit  facilities.  This  service  has  cost  the  United  States  millions- 
of  dollars  annually  in  interest  and  commissions. 

New  York  as  a  Discount  Market 

With  the  development  of  a  discount  market  in  New  York, 
this  city  will  be  in  a  position  to  take  its  place  as  an  international 
money  market,  and  this  will  not  only  make  an  important  economy 
but  by  the  use  of  the  dollar  credit  in  the  liquidation  of  our  pur- 

265 


Fifth  Session — Tuesday  Afternoon 


chases    abroad    will    contribute    materially    to    the    commercial 
growth  and  financial  prestige  of  this  country. 

With  the  establishment  of  branches  of  American  banks  in 
foreign  countries,  the  American  merchant  has  been  given  that 
form  of  personal  representation  which  can  only  be  supplied  by 
a  bank  of  his  own  nationality.  In  doing  business  in  foreign 
countries,  many  days  distant  by  the  nearest  mail,  numerous  diffi- 
culties frequently  arise  in  the  closing  of  transactions,  in  the  col- 
lection of  drafts,  and  in  disputes  over  shipments,  in  the  settle- 
ment of  which  the  American  manufacturer  has  been  at  an  entire 
disadvantage.  At  times  these  difficulties  are  so  serious  as  to  dis- 
courage his  efforts  in  the  development  of  an  otherwise  promising 
field.  The  knowledge  that  his  interests  are  in  the  hands  of  a 
bank  which  is  deeply  concerned  in  the  development  of  the  foreign 
commerce  of  his  country  is  satisfying  and  assuring,  and  offers 
an  inducement  to  the  American  manufacturer  to  put  forth  his 
very  best  efforts  for  the  extension  of  his  trade. 

But  apart  from  the  services  which  are  performed  under  what 
might  be  termed  "banking  proper,"  experience  has  shown  that  it 
is  expedient  to  provide  an  additional  service  with  the  object  of 
bringing  together  the  capable  and  efficient  exporters  and  import- 
ers of  the  home  and  foreign  countries. 

To  accomplish  this  object  it  has  been  found  necessary  to 
establish  and  put  into  operation  a  new  and  distinct  feature  in 
connection  with  American  banks  operating  through  their  branches 
in  foreign  countries. 

The  scope  and  activity  of  this  special  feature  designed  to 
assist  the  manufacturing  exporter  in  his  investigations  and  sub- 
sequent conduct  of  foreign  trade  demands  an  efficient  working 
organization  and  a  force  of  peculiarly  qualified  experts,  with 
headquarters  at  home  and  representatives  in  the  countries  in 
which  the  branches  of  the  bank  have  been  established.  The  work 
of  this  department  in  the  initial  instances  is  to  collect  all  informa- 
tion relating  to  governmental,  economic,  financial  and  trade  con- 
ditions, including  federal  and  State  statistics,  as  well  as  the  con- 
dition of  public  and  semi-public  service  organizations.  Besides 
this,  it  must  secure  data  showing  the  condition  of  various  lines 
of  trade,  and  discover  what  opportunities  exist  for  the  expansion 
of  United  States  commerce — in  short  discover  and  disseminate 
all  information  necessary  as  a  basis  on  which  to  conduct  foreign 
commerce. 

266 


Foreign  Branches  of  American  National  Banks 

It  lies  with  the  branch  banks  to  supply  the  information  suffi- 
cient to  indicate  the  existing  trade  possibilities  from  which  United 
States  manufacturers  and  exporters  may  determine  whether  or 
not  they  can  compete,  and  whether  the  opportunities  promise 
sufficient  volume  of  trade  to  warrant  their  entering  the  market. 

In  order  to  accomplish  this  result,  a  careful  study  of  trade 
conditions  must  be  made  by  competent  investigators,  who,  after 
having  made  themselves  persona  grata  with  the  sources  of  in- 
formation, gather  and  compile  their  findings,  which  are  ulti- 
mately digested  and  sent  to  the  home  office  for  dissemination. 
These  trade  reports  show  the  general  demand  for  the  particular 
article  under  investigation ;  the  quantities  imported  in  prosperous 
and  bad  years,  with  the  latest  figures  of  exports;  the  present 
source  of  supply  and  from  what  foreign  countries  the  demand  has 
been  filled ;  and  the  stock  on  hand  with  wholesale  and  retail  prices. 
A  comparison  is  made  of  the  invoice  prices,  together  with  the 
freight  charges  between  the  United  States  and  South  America 
and  Europe  and  South  America.  This,  added  to  the  customs  duties 
upon  the  article,  gives  the  comparative  cost  of  placing  the  Ameri- 
can goods  in  the  foreign  country  as  against  a  competing  line  from 
Europe,  and  may  be  used  as  a  basis  for  determining  whether  or 
not  there  is  a  profit  in  entering  the  market.  These  reports  also 
show  the  terms  of  payment  which  are  customary,  and  the  manner 
of  packing.  They  give  a  description  of  how  business  is  con- 
ducted in  the  particular  trade  in  question.  They  indicate  through 
what  hands  it  passes  from  the  manufacturer  to  the  ultimate  con- 
sumer, and  furnish  a  list  of  reliable  merchants  dealing  in  the 
article. 

It  is  obvious  that  much  of  the  information  which  is  necessary 
in  order  to  obtain  an  intelligent  and  correct  trade  report,  as  out- 
lined above,  is  of  a  confidential  and  intimate  nature,  and  it  fol- 
lows, therefore,  that  the  personnel  engaged  in  collecting  such  in- 
formation should  be  highly  efficient.  Such  representatives  should 
have  a  knowledge  of  the  language  of  the  foreign  country  to 
which  they  are  sent,  besides  the  knowledge  of  the  trade  conditions 
in  the  United  States.  They  should  be  alert  to  detect  trade  oppor- 
tunities and  capable  of  advising  as  to  the  steps  to  be  taken  in  en- 
tering such  markets  as  well  as  to  the  practice  and  conduct  neces- 
sary to  retain  business. 

When  trade  information  has  been  obtained  from  which  a 
manufacturer,  after  a  study  of  conditions,  has  been  able  to  judge 
whether  or  not  he  can  compete,  the  next  thing  he  wants  to  know 

267 


Fifth  Session — Tuesday  Afternoon 


who  is  who  in  the  foreign  country  buys  his  products  and  what 
their  credit  standing  is. 

The  exporter  who  has  not  visited  the  foreign  country  is  sup- 
plied with  information,  acquainting  him  with  the  address  of  his 
prospective  foreign  customer  and  a  description  of  his  place  of 
business;  the  lines  of  goods  handled;  from  whence  such  goods 
have  been  imported ;  the  number  of  employees  in  his  service ;  the 
facilities  for  distribution,  and  the  character  of  salesrooms,  display 
rooms  and  storage  facilities  afforded  by  such  a  foreign  merchant. 
All  this  information  is  designed  to  assist  the  U.  S.  A.  exporter  in 
gauging  his  prospective  customer.  To  aid  in  supplying  this  in- 
formation a  special  foreign  credit  department  is  attached  to  each 
branch,  whose  particular  duty  is  to  gather  and  compile  credit  in- 
formation. In  this  way  a  branch  is  able  to  supply  the  manu- 
facturer and  exporter  with  the  special  data  embraced  in  the  trade 
reports,  and  in  addition  thereto  a  list  of  the  buyers  and  their 
credit  standing.  The  main  object  is  to  bring  together  the  re- 
sponsible buyers  and  sellers  of  both  countries,  and  to  eliminate 
the  bad  element  of  incompetent  competitors. 

This  credit  work  requires  men  of  more  than  ordinary  ability. 
The  merchants  in  foreign  countries  are  not  accustomed  to  furnish 
information  in  the  same  way  that  such  information  is  obtained 
in  the  United  States,  either  concerning  themselves  or  other  houses 
with  whom  they  have  done  business.  There  is  little  or  no  coopera- 
tion in  Latin-America  in  the  exchange  of  credit  information. 
Foreign  banks  established  in  those  countries  have  operated  inde- 
pendently of  one  another  so  far  as  credit  information  is  con- 
cerned, and  while  some  interchange  exists,  it  is  almost  negligible, 
both  as  to  quality  and  quantity,  in  comparison  with  the  inter- 
change of  credit  such  as  practiced  in  the  United  States.  Practically 
the  same  conditions  exist  in  the  matter  of  securing  credit  informa- 
tion from  commercial  houses.  There  is  also  a  notable  lack  of 
auxiliary  credit  information  bureaus  such  as  we  have  at  home. 

It  has  been  found  advisable  and  useful  to  provide  quarters 
in  the  branch  banks  for  traveling  representatives  of  United  States 
exporters.  When  such  traveling  representatives  arrive  in  the  city 
it  is  customary  for  them  to  make  an  early  call  upon  the  branch 
bank  and  to  obtain  the  latest  and  most  up-to-date  information 
concerning  the  particular  trade  which  they  represent;  also  to 
obtain  the  names  of  buyers  in  good  standing.  In  this  way  the 
branch  banks  are  able  to  direct  the  efforts  of  such  traveling  rep- 
resentatives into  proper  channels,  and  to  give  them  credit  informa- 

268 


Foreign  Branches  of  American  National  Banks 

tion  in  regard  to  their  negotiations  with  the  concerns  to  whom 
they  desire  to  sell.  Thus  considerable  time  and  expense  can  be 
saved,  and  the  aftermath  of  disappointments  avoided. 

An  additional  service  in  the  aid  of  foreign  trade  is  provided 
by  the  selection  of  the  names  of  those  willing  and  competent  to 
act  as  exclusive  agents  or  representatives  of  United  States 
merchants. 

Selection  of  Agents 

The  Branch  Banks  are  frequently  asked  by  U.  S.  manufac- 
turing exporters  to  suggest  names  of  firms  with  whom  they  may 
make  arrangements  to  act  as  representatives  in  the  foreign 
markets.  To  supply  such  names  requires  keen  investigation  and 
discernment  to  avoid  those  whose  affiliations  would  be  detrimental 
and  to  select  those  whose  qualifications  are  such  as  to  promise 
activity  and  integrity  so  as  to  secure  the  utmost  trade  for  the 
United  States  manufacturer. 

This  feature  of  the  foreign  branch  service  is  of  especial  in- 
terest and  much  needed,  since  one  of  the  chief  difficulties  experi- 
enced by  our  manufacturers  is  that  of  obtaining  agents  that  will 
tend  to  build  up  a  continuing  trade.  Experience  has  shown  that 
disappointments  have  arisen  because  manufacturing  exporters 
have  selected  as  agents  those  having  affiliations  or  interests  in 
Europe  who  might  be  inclined  to  divert  the  trade  to  their  old 
European  connections.  This  condition  is  recognized  by  both  the 
U.  S.  A.  producers  and  the  old  established  jobbing  and  commis- 
sion houses  in  Latin-America,  many  of  the  latter  decline  to  take 
agencies,  and  frankly  state  their  reluctance  in  normal  times  to 
"push"  American  goods  in  competition  with  the  European  pro- 
ducers, with  whom  they  have  become  accustomed  to  do  business ; 
hence,  suitable  agents  have  to  be  recruited  from  other  quarters 
in  many  cases. 

For  some  years  to  come,  a  branch  bank  in  a  foreign  country 
will  find  it  expedient  to  provide  an  organization  for  the  aid  of 
United  States  merchants.  It  is  apparent  that  the  American  bank 
establishing  branches  in  foreign  countries  assumes  obligations  and 
expenses  of  operation  beyond  those  embraced  in  the  conduct  of 
purely  domestic  banking.  If  branch  banks  are  to  be  useful  and 
successful  in  expanding  foreign  trade  they  must  undertake  and 
carry  on  these  costly  and  constructive  special  services,  and  con- 
duct careful,  adroit  and  patient  campaigns  in  each  place  where 
a  branch  is  established.  Frequently  a  process  of  wearing  down 
suspicion  in  the  foreign  countries  and  the  cultivation  of  confi- 

269 


Fifth  Session — Tuesday  Afternoon 


dence  is  found  necessary  to  overcome  the  reluctance  to  impart 
information  such  as  is  readily  obtainable  in  this  country  and 
which  is  a  necessary  precedent  to  trade.  It  is  only  after  patient 
endeavor  that  any  substantial  progress  is  made.  It  is  very  diffi- 
cult to  secure  for  these  branches  suitable  men  having  the  neces- 
sary qualifications  which  must  include  a  knowledge  of  banking, 
credits  and  commercial  work  coupled  with  a  speaking  knowledge 
of  the  foreign  language  and  a  personality  suited  to  the  conduct  of 
business  with  foreign  peoples,  and  added  to  this,  a  physique  able 
to  stand  the  life  in  tropical  foreign  countries  and  an  adaptability 
to  foreign  modes  and  customs  of  living.  All  these  things  are  new 
phases  and  difficulties  which  do  not  attend  domestic  banking  but 
which  must  be  reckoned  with  in  foreign  branch  bank  work.  Un- 
fortunately, the  United  States  has  not  been  sufficiently  interested 
in  foreign  trade  to  have  produced  a  supply  of  suitable  men,  and  a 
task  of  securing  likely  young  men  and  educating  them  is  another 
duty  which  has  to  be  assumed  by  any  American  bank  establishing 
a  foreign  branch  bank  system. 


THE  CHAIRMAN:  It  has  been  very  unfortunate  for  us  that 
a  previous  engagement  has  prevented  Mr.  Arnold  from  attending 
this  Conference.  He  is  the  vice-president  of  the  First  Na- 
tional Bank  of  Chicago,  Illinois,  and  is  one  who  has  devoted 
much  time  and  energy  to  the  development  of  the  foreign  trade  of 
this  country. 

As  Mr.  Arnold  is  unable  to  be  present,  I  will  ask  Mr. 
Benney  if  he  will  read  Mr.  Arnold's  paper,  or  allude  to  it  in 
such  way  as  he  sees  fit. 

MR.  BENNEY  :  As  the  paper  is  very  short,  perhaps  you  would 
like  to  listen  to  the  whole  of  it,  as  it  bears  on  the  subject  of 
the  discussion  this  afternoon. 

An  American  Bank  for  Foreign  Trade 

By  JOHN  J.  ARNOLD, 

Vice-President,  First  National  Bank  of  Chicago 

During  the  last  century  the  principal  European  nations,  com- 
prising more  particularly  those  now  at  war,  were  all  actively  en- 
gaged in  the  development  of  foreign  trade.  The  United  States 
of  America,  being  one  of  the  newer  countries  of  the  world,  was 
one  of  the  fields  for  cultivation.  The  natural  resources  of  our 
country  were  and  are  of  such  a  character  that  they  appealed  to 
the  European  investor,  and  as  a  result  European  capital  found 

270 


An  American  Bank  for  Foreign  Trade 


lucrative  employment  on  this  side  of  the  Atlantic.  While  this  is  a 
well  known  fact  it  is  equally  true  that  practically  all  of  the  devel- 
opment of  the  commerce  between  Europe  and  the  United  States 
of  America  has  been  carried  on  without  the  establishment  in  this 
country  of  European  banks  for  foreign  trade.  In  view  of  all 
this  the  question  has  been  raised  by  thinking  men  as  to  why  an 
American  bank  for  foreign  trade  should  be  considered  a  neces- 
sity in  the  development  of  our  own  commerce  with  other  na- 
tions. It  must  be  apparent  even  to  those  who  have  but  a 
superficial  knowledge  of  banking  conditions  the  world  over  that 
facilities  for  the  establishment  of  reciprocal  banking  arrange- 
ments can  be  had  only  between  countries  in  which  strong  and 
substantial  banking  systems  have  been  developed.  On  this  ac- 
count Europe  in  the  past  has  found  it  advantageous  to  do  its 
banking  business  in  the  United  States  of  America  and  in  Canada 
through  American  and  Canadian  banks,  and  vice  versa. 

We  as  a  nation  are  gradually  moving  from  the  position  of 
a  rural  to  that  of  an  urban  population,  which  means  that  we  are 
gradually  becoming  more  largely  a  manufacturing  rather  than  an 
agricultural  country,  and  as  a  result  are  finding  it  necessary  to 
seek  an  outlet  for  our  surplus  of  manufactured  products.  The 
European  nations  already  referred  to  have  long  ago  been  in  this 
position,  and  found  in  the  United  States  of  America  a  natural  out- 
let for  their  articles  of  manufacture  and  in  turn  received  from  us 
our  products  of  the  soil.  This  process  of  development  is  still  going 
on.  We  as  a  nation,  however,  are  becoming  serious  competitors 
with  the  manufacturing  countries  of  Europe  in  the  newer  nations 
of  the  world.  Competition  of  this  character  naturally  has  brought 
about  new  conditions  to  be  reckoned  with. 

In  the  first  place,  the  opportunity  of  establishing  reciprocal 
banking  arrangements  with  the  newer  countries  is  lacking,  owing 
to  the  fact  that  very  few  strong,  local  banking  institutions  have 
been  developed  in  Central  and  South  America  and  the  Orient. 

In  the  second  place,  European  nations  have  already  estab- 
lished banking  institutions  of  their  own,  not  so  much  for  the  pur- 
pose of  furnishing  banking  facilities  to  these  newer  nations,  but 
principally  for  the  purpose  of  developing  commerce.  While  these 
agencies  have  been  placed  at  the  disposal  of  American  banking 
institutions  for  the  taking  care  of  whatever  business  we  may  have 
been  able  to  secure,  they  quite  naturally  will  do  nothing  to  fur- 
ther the  trade  of  their  own  competitors.  But  I  am  presenting  an 
argument  which  it  seems  to  me  is  almost  unnecessary  in  a  gather- 

271 


Fifth  Session — Tuesday  Afternoon 


ing  such  as  this.  I  am  convinced  that  it  is  generally  recognized 
that  banking  facilities  having  the  interest  of  American  trade  as 
their  first  concern  are  absolutely  essential. 

The  question  of  how  to  proceed  to  best  meet  the  require- 
ments is  the  one  of  greatest  importance.  The  commercial  inter- 
ests of  the  United  States  are  fortunate  in  having  a  man  of  vision 
at  the  head  of  our  largest  banking  institution.  Mr.  Frank  A. 
Vanderlip,  president  of  the  National  City  Bank  of  New  York, 
has  had  a  most  powerful  influence  for  good  in  the  banking  world. 
In  my  judgment  his  name  will  stand  out  in  history,  more  particu- 
larly because  of  the  constructive  pioneer  work  done  by  him 
through  his  institution  in  the  laying  of  the  foundation  of  real 
American-international  banking.  Such  a  movement,  however, 
can  only  be  accomplished  by  large  and  powerful  organizations. 
Other  banking  institutions,  of  course,  have  the  right  and  privilege 
to  do  work  of  a  similar  character.  This  would  likely  result  in 
unnecessary  competition  and  expense.  I  am  confident  also  that 
Mr.  Vanderlip  will  agree  with  me  when  I  say  that  the  responsi- 
bility of  this  work  should  not  be  left  entirely  upon  the  shoulders 
of  one  institution,  nor  of  institutions  located  in  one  city  or  com- 
munity. 

As  I  understand  it,  it  is  generally  conceded  by  American 
manufacturers  that  cooperation  in  the  development  of  foreign 
trade  would  prove  advantageous,  and  some  even  claim  it  to  be 
an  absolute  necessity.  This  also  is  true  in  the  banking  field. 

On  this  account  we  have  proposed  an  amendment  to  our 
banking  laws,  which  if  enacted  will  permit  banking  institutions 
to  subscribe  to  capital  for  the  establishment  of  an  American  bank 
for  foreign  trade.  This  amendment  to  the  law  has  been  recom- 
mended for  endorsement  by  the  advisory  council  of  the  Federal 
Reserve  Board,  and  has  recently  been  endorsed  by  the  Federal 
Reserve  Board  itself. 

Participation  in  such  an  organization  should  not  be  limited 
to  any  one  city  or  section  of  the  country,  and  in  this  way  an 
organization  having  for  its  object  the  development  of  foreign 
trade  for  the  entire  nation  would  likely  result.  This  I  think  will 
readily  be  recognized  as  an  object  to  be  desired.  Such  an  under- 
taking would  properly  distribute  the  responsibility  and  at  the 
same  time  limit  the  liability  of  the  banks  interested. 

One  of  the  principal  objections  on  the  part  of  some  of  the 
directorates  of  some  of  our  larger  institutions  to  the  establish- 
ment of  branches  in  foreign  countries  has  been  the  fact  that  the 

272 


An  Independent  Bank  for  Foreign  Trade 


entire  assets  of  the  parent  institution  might  be  jeopardized 
through  mismanagement  of  a  foreign  branch  or  branches.  The 
development  of  such  an  institution  would  necessarily  fall  upon 
the  shoulders  of  a  board  of  directors  elected  by  the  stockholding 
institutions  and  would  naturally  be  carried  on  along  conserva- 
tive lines.  The  strength  of  the  organization  would  not  necessarily 
lie  in  its  paid-in  capital  but  would  be  measured  by  the  amount 
of  capital  subscribed  and  in  addition  to  this  would  have  the 
prestige  of  the  standing  of  the  various  banking  institutions  by 
whom  the  organization  is  owned  and  controlled.  The  subscribed 
capital  might  be,  say,  five  million  or  ten  million  dollars,  but  the 
thought  is  that  the  law  shall  provide  that  payment  may  be  called 
for  only  as  required  in  the  development  of  the  work. 

This  movement  should  not  in  any  way  be  looked  upon  as 
antagonistic  to  the  establishment  of  branches  on  the  part  of  any 
institutions  desiring  to  work  along  independent  lines,  but  would 
furnish  an  opportunity  to  others  who  would  prefer  to  cooperate 
with  each  other.  Personally,  I  should  like  to  see  one  large  com- 
prehensive organization  of  an  American  bank  for  foreign  trade, 
and  it  is  my  judgment  that  the  work  already  accomplished  by 
the  National  City  Bank  of  New  York  could  very  well  be  made 
the  nucleus  of  such  an  undertaking. 


THE  CHAIRMAN  :  Ladies  and  Gentlemen,  the  next  paper  has 
been  prepared  by  the  Committee  on  Banking  and  Currency  of  the 
National  Association  of  Manufacturers,  of.  which  Mr.  Ludwig 
Nissen  is  the  chairman.  He,  unfortunately,  has  to  send  us  this 
letter,  which  I  will  read : 

NEW  YORK,  December  6,  1915. 
Mr.  George  Pope,  Chairman,  International  Trade  Conference. 

DEAR  SIR:  I  am  sorry  to  inform  you  that  I  am  unable  to  attend  the 
meeting  of  the  Conference  tomorrow,  Tuesday,  afternoon  and,  therefore, 
I  must  request  that  Mr.  Gonzales,  member  with  me  of  the  Committee  on 
Banking  and  Currency  of  the  National  Association  of  Manufacturers, 
say  a  few  words  to  your  audience  in  regard  to  the  paper  we  have  pre- 
sented to  you  on  an  Independent  Bank  for  Foreign  Trade. 

I  would  have  liked  to  take  part  in  the  discussion  that  might  follow, 
but  my  ideas  in  this  regard  are  clearly  expressed  in  the  paper  and  I  am 
confident  that  Mr.  Gonzales  will  be  able  to  answer  for  me  any  questions 
submitted. 

Hoping  that  the  Conference  will  be  successful  and  that  some  prac- 
tical results  may  be  achieved,  I  am, 

Very  truly  yours, 

(Signed)    LUDWIG   NISSEN. 
273 


Fifth  Session — Tuesday  Afternoon 


Personally  I  particularly  regret  that  Mr.  Nissen  is  not  here. 
He  has  been  a  co-worker  in  this  Association  ever  since  it  started, 
and  a  most  valuable  and  effective  one;  so  I  am  sorry  he  is  not 
present,  but  we  will  call  upon  Mr.  Gonzales,  and  we  know  that  he 
can  effectively  take  his  place. 

Address  of  Mr.  V.  Gonzales  on  an  Independent 
Bank  for  Foreign  Trade 

MR.  GONZALES:  The  unfortunate  absence  of  Mr.  Nissen  al- 
lows me  the  privilege  of  addressing  you  again.  The  project  sub- 
mitted by  the  Committee  on  Banking  and  Currency  of  the  Asso- 
ciation in  regard  to  an  independent  bank  for  foreign  trade  is 
clearly  stated  in  the  paper  presented,  and  Mr.  Nissen  has  re- 
quested me  to  answer  any  questions. 

With  your  permission,  however,  I  will  say  a  few  words  about 
this.  We  have  heard  a  great  deal  about  the  necessity  for 
banking  facilities  all  over  the  world.  What  are  these  banking 
facilities  ?  In  what  way  do  they  exist  ? 

After  you  have  sold  the  goods,  with  a  lot  of  trouble,  you 
have  gone  fifty  per  cent,  of  the  way  only.  The  other  half  of  the 
way  is  to  get  your  money.  It  is  very  easy,  or  it  was  very  easy, 
for  a  good  firm  to  discount  its  bill  on  some  countries,  but  what 
about  the  other  end?  How  was  the  money  for  that  bill  col- 
lected? 

I  do  not  want  to  offend  any  of  the  banks,  especially  those 
that  are  represented  here  today,  but  you  all  know  that  the  banks 
do  not  collect.  They  receive  the  money. 

I  have  been  in  South  America,  inside  a  bank,  and  I  know 
how  they  treat  the  collection  of  bills.  If  the  bank  has  a  col- 
lection of  its  own  against  the  same  man  the  bank  will  collect 
its  own  account  first,  and  you  can  not  blame  them  for  doing  that. 
They  put  the  foreign  collections  in  the  second  place. 

If  the  man  against  whom  they  have  a  collection  is  a  good 
depositor  or  a  good  customer  of  the  bank  they  do  not  like  to 
bother  him  a  great  deal  on  account  of  the  man  who  is  thousands 
of  miles  away.  And  you  cannot  blame  them  for  that,  either. 

Weakness  of  Present  Collection  Methods 

Now,  how  have  the  drafts  drawn  from  this  country  on  all 
other  countries  been  collected?  You  cannot  expect  the  banks  to 
do  anything  else  than  a  banking  business ;  but  there  are  a  lot  of 
details  attached  to  the  collection  of  drafts. 

274 


An  Independent  Bank  for  Foreign  Trade 


I  never  thought  that  the  way  to  collect  money  from  a  man 
was  to  put  him  up  against  a  wall.  Sometimes  you  need  a  little 
elasticity  about  it.  A  draft  becomes  due  and,  for  some  reason 
or  other,  the  man  does  not  pay  it.  The  collecting  bank  either 
does  not  collect  at  all,  or  else  tries  to  push  that  man  against 
the  wall.  They  have  their  business  to  take  care  of.  Now,  in 
order  that  the  American  foreign  trade  can  be  expanded  on  safe 
lines,  especially  at  this  time,  we  need  not  only  a  bank  that  will 
receive  the  money  and  remit,  but  we  need  the  men  that  will  take 
care  of  the  goods. 

You  have  seen  very  often,  and  we  have  experienced  in  the 
Association,  the  troubles  of  our  members  that  when,  in  one  case 
a  draft  has  been  refused  acceptance,  for  any  reason — there 
are  lots  of  reasons — the  goods  remain  as  a  rule  in  the  custom 
house,  unprotected,  accruing  expenses,  exposed  to  damage;  and 
the  unfortunate  exporter  here  knows  it  two  or  three  or  four 
months  afterwards,  when  perhaps  the  storage  charges  and  others 
have  eaten  a  great  part  of  the  value  of  the  goods. 

When  there  are  accidents  happening  on  the  sea,  the  goods 
arriving  only  in  part;  when  there  are  differences  between  the 
contents  of  a  package  and  the  invoice — all  those  troubles  are 
very  familiar  to  you — do  you  think  any  bank  located  in  a  for- 
eign country  is  going  to  take  the  trouble,  for  five  dollars  or  no 
money  at  all,  to  look  after  your  interests?  They  cannot  do  it. 
I  do  not  say  they  don't  do  it  because  they  don't  want  to;  they 
cannot  do  it.  They  have  other  business  of  more  importance  to 
attend  to. 

You  have  one  line  in  this  country  that  has  been  very  suc- 
cessful and  has  helped  this  country  a  great  deal  in  its  develop- 
ment; it  is  the  sale  of  agricultural  machinery  on  a  long  term 
basis ;  what  you  call  the  installment  plan  here. 

The  Bank  Would  Facilitate  Long  Term  Credits 

Why  can  you  not  sell  in  Argentina  and  Brazil,  Ceylon  or 
any  part  of  the  world,  these  steam  plows  and  tractors  and  all 
that  type  of  big  modern  machinery  on  the  same  one  or  two  or 
three  year  basis  you  sell  them  here  ?  The  guaranty  given  by  the 
man  in  any  part  of  the  world  is  just  the  same  as  the  guaranty 
given  in  this  country;  but  you  cannot  use  that  guaranty.  You 
cannot  discount  it  here  as  you  can  discount  your  own  paper. 
If  you  had  a  bank  that  had  offices  all  over  the  world  you  could 
sell  machinery  under  long  term  plans,  and  that  bank,  with  knowl- 

275 


Fifth  Session — Tuesday  Afternoon 


edge  of  the  man,  with  knowledge  of  the  country,  the  land  and 
the  laws  of  the  country — that  bank  could  discount  one  or  two 
or  three  year  notes  and  give  you  the  money  here. 

It  would  be  investing  in  foreign  countries,  leaving  the  money 
here  and  sending  outside  the  manufactured  goods.  You  know 
how  far  that  can  extend.  In  what  country  in  tLe  world  has 
agriculture  been  developed  as  it  has  been  developed  here,  on  a 
scientific  basis  ? 

Not  everybody  can  buy  for  cash,  nor  on  very  short  terms, 
a  machine  costing  eight  or  ten  thousand  dollars.  Those  machines 
could  be  bought,  if  there  was  a  bank  that  could  discount  those 
mortgage  notes,  or  in  any  other  form  that  the  security  might  be 
given. 

American  Manufacturers  Willing  to  Extend  Credit 

I  have  had  the  experience  of  talking  with  hundreds  of  man- 
ufacturers since  the  war  began,  especially.  They  are  perfectly 
willing  to  sell  on  credit,  provided  they  can  turn  over  their  money 
here,  and  that  somebody  will  take  care  of  them  at  the  other  end. 

I  have  had  the  questions  put  to  me  one  hundred  times: 
'Where  can  I  discount  the  paper?"  and  "What  certainty  have  I 
got  that  somebody  is  going  to  have  pity  on  me  at  the  other  end  ?" 

I  have  seen,  not  in  this  country  but  out  of  this  country, 
banks  surrendering  bills  of  lading  against  acceptance  of  a  man 
who  was  failing  a  few  days  afterwards.  They  do  not  care.  They 
have  not  got  time  to  care.  The  people,  especially  from  abroad, 
pass  as  shadows  before  their  eyes. 

The  banks  in  every  country  are  more  or  less  entangled  with 
the  people  who  live  in  that  particular  city  or  that  particular 
country.  They  do  not  want  to  displease  them.  And  these  banks 
go  into  the  banking  business  for  profit;  and  where  there  is  no 
profit  they  will  not  go,  except  in  very  exceptional  cases  when 
they  are  trying  to  open  a  field. 

We  want  a  bank  that  is  going  to  overlook  the  profit;  that 
is  going  to  attend  more  to  the  service.  There  are  some  things 
that  the  bank  cannot  do  for  business,  but  that  this  bank  should 
do  for  service.  You  cannot  organize  a  bank  of  that  kind  ex- 
cept by  cooperation  among  the  people  who  have  interests  in  the 
foreign  trade. 

The  subscription  of  the  stock  of  a  bank  of  that  kind  has 
nothing  to  offer  in  the  form  of  watered  stock  or  in  the  form 
of  power.  I  know  that  small  contributions  by  a  lot  of  people 
will  take  a  long  time,  and  it  would  require  great  efforts  to  get 

276 


An  Independent  Bank  for  Foreign  Trade 


all  the  money  that  is  necessary;  but  there  are  25,000  people 
in  this  country  that  have  interests  in  foreign  trade,  and  if  only 
$1,000  was  subscribed  by  each  one,  as  suggested  by  the  com- 
mittee, it  would  start  with  $25,000,000. 

$25,000,000  is  a  drop  in  the  bucket,  when  you  remember 
that  our  foreign  trade  is  five  billions.  $50,000,000  or  $25,000,- 
ooo  can  be  turned  over  twice  in  one  year,  because  not  all  the 
drafts  are  120  days  or  90  days.  Some  are  sight — three  days, 
six  days,  ten  days,  fifteen  days,  and  so  forth.  So  that  you  can 
rely  upon  the  fact  that  $25,000,000  can  turn  over  $50,000,000 
worth  of  business. 

The  reasonable  profits  on  $^0,000,000  are  not  enough  to 
keep  up  the  number  of  offices  that  a  bank  of  this  kind  should 
have.  There  should  not  be  one  country  in  the  world  where  this 
bank  did  not  have  a  branch,  agency  or  correspondents. 

A  Bond  Issue  Suggested 

You  would  have  to  have  a  larger  volume  of  business  to  take 
care  of  it.  We  have  suggested  that  permission  be  asked 
from  Congress  to  issue  bonds;  because  the  bonds  issued  by 
a  bank  of  this  kind  would  be  better  than  the  best  gilt-edge  bond 
existing  in  this  country.  All  the  property  and  all  the  goods  that 
are  placed  behind  the  bonds  that  are  existing  today  have  a  value 
or  have  not  a  value.  A  piece  of  real  estate,  if  you  do  not  sell 
it,  has  no  value  at  all.  Merchandise  stored  in  warehouses  has 
no  value  if  you  cannot  sell  it;  but  the  goods  that  are  exported 
are  sold,  and  within  a  certain  time  the  money  has  to  come  back — 
gold  or  the  equivalent  of  gold. 

We  have  no  doubt  that  the  bonds  issued  by  a  bank  of  this 
kind  could  be  placed  in  any  amount.  We  have  suggested  the 
issue  of  $100,000,000,  which,  turned  over  twice,  would  make 
$250,000,000  worth  of  business  for  the  bank — a  volume  of  busi- 
ness at  a  very  small  profit,  at  a  reasonable  profit,  without  making 
you  pay  for  the  services,  nor  making  the  man  at  the  other  end 
pay  for  the  services,  but  simply  taking  the  things  as  they  are. 

That  bank  would  live,  and  not  belong  to  anybody  nor  to 
any  group  of  people  or  any  group  of  interests,  but  to  every- 
body. The  bank  would,  therefore,  be  in  a  position  to  serve 
everybody. 

It  is  necessary  that  you  go  to  a  bank  without  begging  for 
the  money,  for  God's  sake.  A  man  takes  business  to  a  bank  and 
he  has  to  beg  the  bank  for  the  money.  I  don't  say  that  in  every 

277 


Fifth  Session — Tuesday  Afternoon 


case  it  is  the  same;  but  in  the  majority  of  cases  it  is.  How 
many  people  can  discount  their  bills  on  all  countries  in  the 
world?  How  many  have  been  able  to  do  it?  Some  others  have 
been  able  to  discount  everything  they  wanted.  That  is  society, 
and  that  is  the  trade;  but  we  must  have  a  bank  that  will  serve 
everybody  alike. 

So  long  as  the  man  who  discounts  the  bill  is  good,  the  bank 
should  not  look  at  the  place  where  it  is  drawn,  nor  the  amount 
of  the  bill. 

Recommended  for  Consideration 

Of  course  these  ideas  may  be  fantastic,  to  some  people. 
We  have  studied  the  matter  very  deeply,  however,  and  we  have 
tried  to  cover  all  the  troubles  that  we  have  seen  in  the  office, 
and  we  have  arrived  at  the  point  of  recommending  to  a  con- 
ference of  this  kind  not  a  resolution,  not  a  recommendation,  but 
a  consideration  of  the  question.  And  I  think  that  if  this  bank 
were  established,  it  would  not  find  opposition  on  the  part  of  any 
of  the  other  banks,  because  it  would  not  go  into  their  fields.  This 
bank  is  not  supposed  to  receive  deposits — the  main  source  of 
profits  of  the  other  banks.  It  would  not  touch  deposits  in  this 
country,  nor  In  the  other  countries.  Every  country  has  its  bank- 
ing system,  small  or  big.  They  all  base  their  profits  on  the  de- 
posits of  the  people.  This  bank  would  not  go  to  disturb,  either 
in  this  country  or  in  any  foreign  country,  the  banking  system 
they  have  in  operation  now. 

It  would  only  devote  itself  to  buying  every  single  piece 
of  paper  that  was  offered  for  shipment  of  goods  to  a  foreign 
country.  It  would  buy  drafts  in  foreign  countries  in  accord- 
ance with  the  local  banks,  because  it  is  not  trying  to  make  money, 
but  to  make  service  and  cover  its  expenses. 

You  know  very  well,  when  you  go  to  a  bank  to  discount  a 
bill,  the  banks  take  from  you,  in  the  shape  of  exchange  or  in 
the  form  of  interest,  some  money  for  the  services,  for  advancing 
the  money.  This  bank  would  not  take  any  more  from  you  than 
the  other  banks  are  taking.  You  know  how  the  foreign  drafts 
are  collected.  When  you  draw  a  draft  on  Argentina  in  dollars 
or  pounds  the  people  of  Argentina  do  not  pay  that  bill  in  pounds 
or  dollars ;  they  pay  it  in  their  money,  because  they  have  nothing 
else. 

The  conversion  of  that  draft  into  currency  and  the  recon- 
version of  that  currency  into  a  draft  of  the  nation  means  the 
exchange  profit  that  the  foreign  bank  makes. 

278 


American  Banking  Abroad — An  Independent  Bank 
Sources  of  Profit 

The  foreign  trade  for  this  country  before  the  war  was 
twenty-five  hundred  millions  of  exports.  How  many  American 
banks  received  the  profits  in  exchange  of  those  drafts  in  for- 
eign countries?  Scarcely  any.  The  profits  were  left  in  the 
hands  of  the  foreign  bankers  that  were  handling  those  collections. 
The  foreign  banks  in  foreign  countries  welcomed  the  collection 
of  the  drafts,  because  it  is  a  source  of  profit  in  exchange  for 
them :  their  buying  rate  of  exchange  and  selling  rate  of  exchange, 
with  a  wide  or  narrow  margin,  according  to  the  gold  obtained. 
It  may  be  two  or  three  or  four  or  five  per  cent.  We  have  esti- 
mated the  profits  at  only  one  per  cent.  So  that  your  foreign 
customer  would  not  have  to  pay  to  this  bank  any  more  than 
he  would  have  to  pay  to  any  other  bank. 

If  you  have  a  little  time  to  read  the  paper  that  has  been 
presented  you  will  find  how  easy  it  is  to  accomplish  it  and  how 
little  it  would  disturb  the  business  of  the  whole  country. 

After  some  years,  when  all  the  offices  were  established,  all 
under  the  management  of  young  men  that  could  be  sent  from 
this  country  to  study  the  needs  of  that  country  and  the  pos- 
sibilities of  it — not  for  the  bank,  but  for  the  development  of 
international  commerce — how  far  the  foreign  trade  could  go ! 

I  do  not  think  of  anything  more  that  I  could  say  in  this 
regard,  but  if  any  of  the  gentlemen  present  would  like  to  ask 
any  questions  on  this  matter  I  shall  try  to  answer  them  as  briefly 
as  possible. 

(Following  is  the  paper  submitted  to  the  Conference  by  the 
National  Association  of  Manufacturers'  Committee  on  Banking 
and  Currency)  : 

American     Banking     Abroad — An     Independent 

Bank 

BY  THE  COMMITTEE  ON  BANKING  AND  CURRENCY  OF  THE 
NATIONAL  ASSOCIATION  OF  MANUFACTURERS. 

Before  the  war,  it  was  stated  that,  because  of  lack  of  banking 
facilities  at  home  and  abroad,  American  foreign  trade  did  not 
expand  as  far  and  as  fast  as  was  desired. 

This  complaint  was  largely  unfounded.  There  were  within  the 
country  excellent  banking  facilities  for  handling  all  sound  foreign 
business  to  and  from  any  country  on  the  earth.  American  banks 

279 


Fifth  Session — Tuesday  Afternoon 


and  agencies  of  foreign  banks  supplied,  under  reasonable  con- 
ditions, all  the  money  needed. 

There  were  no  American  banks  abroad,  so  to  say.  A  few 
agencies  in  some  of  the  principal  cities  of  Europe  and  fewer  still 
in  Asia  and  Latin  America  were  the  only  signs  of  American  bank- 
ing activities  outside  of  the  United  States. 

American  Banking  Needs  Abroad 

Had  there  been,  however,  American  banks  all  over  the  world, 
following  the  same  lines  and  principles  of  other  foreign  institu- 
tions, nothing  would  have  been  gained.  What  was  wanted  was 
not  so  much  banks  to  do  a  general  business  in  foreign  countries, 
as  one  or  more  institutions  devoted  more  to  the  care  of  accounts 
and  protection  of  American  exporting  interests,  than  to  the  earning 
of  regular  banking  profits. 

As  channels  for  investments  in  foreign  lands,  something  not 
thought  of  at  that  time,  and  as  sources  of  profit  arising  from 
the  different  banking  activities,  the  regular  banks  and  their 
branches  or  agencies  would  have  been  quite  appropriate. 

But  they  could  not  have  stimulated  business  between  the 
United  States  and  foreign  countries,  inasmuch  as  their  functions 
would  have  been  to  take  care  of  themselves  more  than  to  protect 
foreign  accounts,  thereby  inducing  exporting  interests  to  extend 
suitable  credit  everywhere. 

Effect  of  European  War  on  Trade  and  Credit 

The  war  has  upset  all  lines  of  trade  and  has  placed  this 
country  in  the  most  exceptional  position — that  of  taking  care  of 
the  whole  world,  at  peace  and  at  war.  All  countries  call  for 
credit  here,  and  while  some  part  of  it — that  relating  to  financial 
transactions — can  and  should  be  left  in  the  hands  of  regular 
banks ;  the  extending  of  commercial  credit,  more  feared  now  than 
before,  cannot  be  done  unless  it  is  assisted  by  an  institution  de- 
voting all  its  energies,  regardless  of  the  profits  involved,  to  safe- 
guard manufacturers  and  others  doing  foreign  business. 

This  does  not  mean  that  a  benevolent  institution  should  look 
after  the  efficient  collection  of  accounts  in  all  places,  nor  that  the 
cost  of  this  work  should  be  paid  in  the  shape  of  contributions, 
but  that  a  bank,  earning  just  enough  to  cover  its  expenses  and  a 
very  moderate  return  on  its  capital  could  do  as  service,  what  it 
would  not  pay  other  banks  to  do  as  business.  This  service  was 
most  necessary  before  the  war.  To-day  it  is  indispensable. 

Manufacturers  and  exporters  have  always  been  willing  to  ex- 

280 


American  Banking  Abroad — An  Independent  Bank 

tend  reasonable  credit,  provided  they  could  rely  upon  someone 
to  look  after  their  foreign  accounts,  and  that  they  were  not  sub- 
jected to  any  more  than  the  ordinary  commercial  risks.  They  are 
willing  to  do  so  now  under  the  same  conditions. 

Independent  Attitude  of  Banks  Abroad 

Banks,  American  or  foreign,  did  not  protect  in  any  way,  shape 
or  form,  the  interests  of  foreign  creditors  in  any  country.  They 
would  not  act  as  consignees  in  any  case,  and  they  left  goods 
practically  abandoned  if  for  any  reason  a  draft  was  refused. 
They  would  not  make  Customs  declaration,  nor  clear  and 
store  goods  in  case  of  need,  usually  leaving  them  uninsured,  ac- 
cruing expenses,  and  in  some  cases  exposed  to  damage.  They 
would  not  enforce  collection  of  drafts  at  maturity,  nor  would 
they  even  rank  these  in  line  with  their  own  credits.  They  would 
not  demand  guarantees  when  necessary,  nor  would  they  accept 
them  when  tendered.  They  would  not  act  on  behalf  of  foreign 
creditors  in  case  of  financial  difficulties,  nor  would  they  take  any 
action  to  secure  fair  and  equitable  liquidation  in  the  event  of 
bankruptcy.  They  would  not  act  for  shippers  in  case  of  claims 
for  shortage,  damage  or  mistakes,  leaving  foreign  creditors  at 
the  mercy  of,  sometimes,  unreasonable  demands  which  could  not 
be  contested.  They  would  not  undertake  to  sell,  or  otherwise  dis- 
pose of  abandoned  goods  or  those  turned  over  in  settlement  of 
accounts.  They  would  not  use  their  judgment  and  refrain  from 
surrendering  shipping  papers  in  case  of  danger,  nor  would  they 
warn  their  foreign  customers  when  needed.  They  would  not 
follow  the  business  of  their  customers'  clients,  nor  would  they 
furnish  information  concerning  them  except  in  a  very  general 
way.  In  fact,  they  would  do  nothing  more  than  receive  the  value 
of  drafts  when  acceptors  were  willing  to  pay  them. 

Banks  and  Their  Depositors  in  Foreign  Lands 

Banks  in  all  countries,  engaged  in  a  general  banking  business, 
receiving  deposits,  making  loans,  dealing  in  foreign  exchange, 
etc.,  would  naturally  look  after  their  own  interests  first.  Were 
they  to  attend  to  the  interests  of  foreign  customers  they  would 
have  had  to  increase  substantially  their  staffs,  and  then  they  could 
not  have  avoided  conflicting  interests  from  different  countries. 
It  would  have  been  practically  impossible  to  remain  absolutely 
impartial  in  the  bitter  competition  existing,  and  to  treat  alike 
their  credits  and  those  of  their  foreign  customers. 

281 


Fifth  Session — Tuesday  Afternoon 


It  is  not  difficult  to  realize  why  banks  receiving  deposits  can- 
not be  expected  to  press  claims  of  foreign  customers  that  may 
involve  the  loss  of  domestic  clients'  good  will,  nor  why  they  should 
always  collect  their  accounts  in  preference  to  those  of  a  far-away 
customer. 

To  afford  suitable  protection  to  American  trade,  in  a  way 
which  would  permit  unrestricted  expansion  under  safe  and  sound 
conditions,  it  was  and  it  is  indispensable  to  have  unity  of  action 
through  one  institution,  essentially  American  in  character,  which 
shall  devote  its  entire  attention  and  activity  to  serving  the  in- 
terests of  American  business  only;  having  no  preference  or  ex- 
ceptions to  make  for  its  own  account  and  self-protection. 

Credit  System  Needed 

The  "Cash"  exigency  of  the  day  is  making  the  export  trade 
much  more  difficult  than  it  was  before,  and  is  creating  a  wide- 
spread feeling  against  this  country.  Foreign  merchants  cannot  pay 
cash,  much  less  cash  in  advance,  as  is  very  often  demanded. 

Those  who  will  not  be  convinced  of  the  convenience  of  extend- 
ing credit,  not  even  if  protected  as  far  as  human  provision  can  go, 
have  recourse  to  an  intermediate  step — time  without  credit,  and 
this  can  be  done  on  the  "d/p"  draft  system,  (documents  to  be 
delivered  against  payment  only),  buyers  being  granted  time  to 
pay,  leaving  the  goods  as  collateral  until  the  draft  is  cancelled 
in  whole  or  by  installments.  This  involves  a  great  deal  of  detail 
work,  and  is  something  not  liked  by  ordinary  banks  which  look 
for  a  quick  turnover  of  the  money  with  the  least  possible  trouble. 
It  is  a  service  most  needed  and  one  that  cannot  be  done  properly 
unless  a  bank  renders  it,  regardless  of  the  trouble  and  of  the 
small  profit. 

Scope  of  Established  Banks 

Regular  banks,  Federal  Reserve,  National  or  State,  have  a  very 
extensive  field  of  their  own  without  resorting  to  this  work  which 
demands  a  lot  of  patience  and  is  scarcely  remunerative.  They 
should  not  be  willing  to  see  their  activities  curtailed  or  embar- 
rassed by  displeasing  some  who  are,  perhaps,  their  most  import- 
ant and  prominent  domestic  clients,  when  trying  to  enforce 
collections  which  necessitate  the  standing  firmly  in  the  defense  of 
foreign  customers  of  much  less  business  importance  to  them. 

A  bank  having  no  affiliations  at  home  or  abroad,  and  being 
merely  a  machine  to  protect  and  collect  accounts,  would  not  need 
good  will  so  much  as  those  which  make  their  profits  out  of 

282 


American  Banking  Abroad — An  Independent  Bank 

handling  local  depositor's  money.  A  bank  of  this  kind  cannot 
be  organized  except  with  the  cooperation  of  people  interested  in 
foreign  trade.  Its  promotion  would  have  nothing  to  offer  to 
anyone,  and  the  small  possible  dividends  to  be  earned  would  not 
be  tempting  to  investors,  especially  at  a  time  when  large  and 
quick  profits  are  dazzling  the  minds  of  the  majority.  Small  sub- 
scriptions by  each,  as  suggested  further  on,  from  the  large 
number  of  concerns  needing  its  services,  would  assure  a  capital 
big  enough  to  operate  it  successfully. 

There  is  nothing  tempting  for  the  average  banker :  no  money 
to  command  and  no  influence  to  exercise,  and  it  cannot  exist 
except  by  philanthropy  or  cooperation. 

Unwisdom  of  Confusing  Interests 

It  is  said,  with  good  reason,  that  manufacturers  and  ex- 
porters should  not  become  bankers.  This  is  perfectly  correct: 
they  should  not  indulge  in  any  other  activities  than  those  fitted 
to  their  particular  lines  of  business;  but  a  manufacturer  would 
not  become  a  banker  by  holding  stock  in  a  bank  of  the  kind  des- 
cribed, no  more  than  he  is  a  banker  to-day,  because  he  holds  one 
or  more  shares  of  stock  in  one  or  more  of  his  local  banks. 

It  is  one  thing  to  be  a  banker  and  another  to  be  a  passive 
stockholder  in  a  bank.  Bank  stocks  owned  by  manufacturers  to- 
day, do  not  make  the  holders  bankers,  notwithstanding  that 
many  are  directors  and  even  officers  of  banks.  The  shares  are 
held  as  a  rule  for  investment  when  not  for  a  certain  influence  in 
accommodating  their  needs.  The  small  amount  of  stock  which 
each  would  hold  in  the  bank  that  is  suggested,  would  assure  them 
certain  services  they  do  not  and  cannot  have  to-day. 

Necessity  for  a  Universal  Trade  Bank 

Not  looking  at  the  necessity  of  securing  a  permanent  share 
in  the  trade  of  other  countries,  which  we  will  not  have  unless 
the  world  is  covered  with  a  network  of  trade  ties  and  affiliations ; 
and  considering  only  the  individual  interests  of  each  of  those 
doing  or  willing  to  engage  in  foreign  business,  the  creation  of  an 
institution  which  will  protect  their  accounts  in  all  places,  and  in 
this  form  assist  them  in  developing  their  business,  is  an  absolute 
necessity. 

One  of  the  obstacles  which  has  greatly  handicapped  Ameri- 
can commerce  since  the  outbreak  of  the  war,  has  been  uncertainty 
as  to  receiving  proceeds  of  collections.  Foreign  banks  have  col- 

283 


Fifth  Session — Tuesday  Afternoon 


lected  drafts  and  then  have  failed  to  remit  because  of  moratorium 
provisions  or  lack  of  exchange.  The  whole  risk  entailed  by  this 
delay  has  been  thrown  on  American  exporters,  as  almost  all  banks 
have  declined  any  responsibility  if  they  have  not  universally  done  so. 
This  would  not  have  happened,  had  there  been  in  operation 
branches  or  agencies  of  such  an  institution  as  is  suggested.  It 
might  not  have  had  the  power  of  creating  exchange  when  there 
was  none,  but  it  could  have  collected  in  currency,  and  guaranteed 
its  conversion  into  American  money  at  a  future  date;  while  the 
head  office  in  the  United  States  would  have  paid  the  value  col- 
lected. The  surprising  increased  balance  of  trade  in  favor  of 
almost  all  countries,  is  showing  distinctly  that  their  exchanges 
have  been  available.  It  is  then  inexplicable  why  some  foreign 
banks  could  not  find  the  means  of  remitting:  the  branches  of  the 
contemplated  American  bank  would  have  found  the  means  of 
doing  so. 

Proposed  Bank  to  be  Exclusively  American 
It  is  suggested  that  there  be  established  as  early  as  possible, 
a  bank  devoted  exclusively  to  serve  the  interests  of  American 
foreign  trade.  Its  principal  offices  would  be  in  New  York,  with 
branches,  agencies  and  correspondents,  as  the  volume  of  busi- 
ness may  require,  in  other  cities  of  the  United  States,  and  in  all 
foreign  countries.  This  institution,  which  might  be  called 

THE  AMERICAN  BANK  FOR  FOREIGN  TRADE 
with  branches,  agencies  or  correspondents  all  over  the  world, 
would  have  extraordinary  facilities  for  accomplishing  what  all 
other  existing  banks  cannot  do. 

The  bank  would  receive  no  deposits,  nor  would  it  interfere 
in  the  least  with  domestic  banking  affairs.  Its  business  would  be 
confined  to  the  following: 

(a)  To  buy  drafts  drawn  against  bills  of  lading, 

(b)  To  collect  drafts  and  accounts  in  and   from  foreign 
countries, 

(c)  To  advance  money  on  foreign  accounts, 

(d)  To  issue  drafts  and  letters  of  credit,  and 

(e)  To  accept  drafts  against  shipments  or  collections. 

Services 

Through  its  offices,  all  over  the  world,  the  bank  would 
render  the  following  services: 

I.  To  gather  information  on  the  financial  standing  and 
integrity  of  buyers  and  others; 

284 


American  Banking  Abroad — An  Independent  Bank 

2.  To  gather  information  regarding  opportunities  for  Ameri- 
can goods  and  activity;  study  the  resources  and  prospects  for 
agricultural,  industrial,  mining,  commercial  and  other  develop- 
ments in  all  countries; 

3.  To  compile  lists  of  local  buyers,  merchants  and  others, 

4.  To  assist  traveling  agents, 

5.  To  receive  and  distribute  mail  for  its  customers,  and 

6.  To  assist  its  customers   in  local  advertising  in   foreign 
countries,  and  in  the  distribution  of  American  commercial  lit- 
erature. 

Bills  of  lading  could  be  drawn  in  the  bank's  name  instead 
of  to  "order,"  as  is  done  at  present,  the  bank  acting  as  consignee 
until  bills  of  lading  or  goods  were  transferred  to  buyers. 

In  case  of  accident  (general  average,  partial  or  total  loss, 
damage,  etc.),  on  the  voyage,  or  in  port,  the  bank  would  care  for 
the  consignment,  receive  conditional  acceptance  or  payment  of 
drafts,  and  collect  the  balance  from  underwriters. 

The  Bank  as  Exporter's  Agent 

In  case  of  default  by  the  consignee,  the  bank  would  make 
Customs  clearance  and  attend  to  insurance.  It  would  store 
goods,  hold  same  for  account  of  whom  it  might  concern,  and 
dispose  of  them  upon  instructions.  It  would  store  and  transfer 
the  goods  in  bond,  or  clear  them  as  and  when  considered  safe  or 
convenient,  with  or  without  guarantee.  It  would  in  every  way 
safeguard  the  shippers'  interests  until  each  transaction  was  finally 
settled. 

At  maturity  it  would  collect  the  drafts  (not  merely  receive 
the  value)  enforcing  payment  without  undue  pressure  unless 
unavoidable.  Having  no  preferential  claims  of  its  own  to  care 
for,  all  would  be  treated  alike,  no  discrimination  being  made  be- 
tween drafts  discounted  and  those  taken  for  collection  only. 

Advantages  of  Combination 

Combined  action  on  behalf  of  all  American  creditors  would 
be  immensely  beneficial  to  each;  no  one  securing  advantage  in 
one  instance  and  suffering  the  reverse  in  others.  In  case  of  finan- 
cial difficulties  the  bank  would  be  in  a  position  to  act  for  the 
best  interests  of  all  concerned,  granting  extension  of  time  against 
guarantees  or  otherwise  if  advisable,  and  avoiding  the  always 
disastrous  recourse  to  bankruptcy  proceedings.  Even  in  this 
case,  the  individual  representation  of  many  creditors,  whether  a 
majority  or  not,  would  secure  fair  and  equitable  liquidation  of 

285 


Fifth  Session — Tuesday  Afternoon 


assets  to  the  advantage  of  all.  Goods  would  not  then  be  sacri- 
ficed unnecessarily,  and  relations  would  be  closer  between  Ameri- 
can business  men  and  their  foreign  customers. 

Long  credit  sales  on  the  installment  plan,  such  as  are  made 
in  the  United  States  especially  for  the  development  of  agricul- 
ture, or  for  the  establishment  of  industrial  plants,  public  improve- 
ments, etc.,  would  become  feasible,  and  would  expand  this  line 
of  trade  enormously.  Foreign  mortgages  and  collaterals,  at 
present  worthless  in  the  United  States  because  of  the  impossi- 
bility of  disposing  of  them,  might  be  accepted  and  held  by  the 
bank  at  its  branches  or  agencies,  and  their  value  advanced  to 
sellers.  Knowledge  of  local  laws,  of  properties,  and  of  indi- 
viduals, in  each  place,  would  permit  the  bank  to  carry  on  this 
class  of  business  without  risk.  This  would  be  an  investment  in  a 
foreign  country,  but  of  goods,  not  of  money;  the  money  would 
remain  in  the  United  States. 

Business  by  parcel  post,  constantly  expanding,  cannot  be  done 
at  present,  except  on  open  account  or  payment  in  advance  by 
buyers;  an  inconvenience  for  both  seller  or  buyer.  The  bank 
could  be  the  addressee,  collecting  on  delivery  of  goods  or  transfer 
of  receipt.  There  is  no  business  convenience  which  the  bank 
could  not  afford  to  its  customers  for  the  promotion  and  advance 
of  their  trade. 

Imports 

The  main  purpose  of  the  bank  is  to  protect  American  trade 
in  foreign  countries,  and  not  that  of  foreign  countries  in  the 
United  States;  in  other  words  to  promote  exports  and  not  im- 
ports. However,  it  could  assist  American  buyers  in  the  purchase 
of  foreign  goods,  especially  raw  materials  for  manufacture.  This 
would  accomplish  a  double  purpose:  to  serve  the  customer  and 
to  utilize  drafts  against  imports  as  remittances  for  collections 
abroad.  It  would  also  increase  the  bank's  earnings  in  exchange. 

Capital 

The  capital  of  the  bank  could  be,  at  the  start,  Fifteen  Mil- 
lion Dollars  ($15,000,000)  divided  into  15,000  shares  of  $1,000 
each,  to  be  increased  as  and  when  found  convenient:  it  might 
be  subscribed  by  manufacturers,  exporters,  importers,  and  others 
interested  in  foreign  trade.  As  the  organization  of  branches, 
agencies  and  correspondents  would  require  some  time,  the  capital 
could  be  called  in  by  installments  during  the  period  of  one  year, 

286 


American  Banking  Abroad — An  Independent  Bank 

Subscriptions  to  Stock 

Subscriptions  for  stock  should  be  requested  in  amounts  that 
would  cause  no  anxiety  to  any  stockholder;  say,  $1,000  each. 
It  is  certainly  more  difficult  to  interest  a  large  number  of  people 
than  to  raise  the  money  among  a  few  large  stockholders,  but  the 
former  can  be  done  with  success,  since  it  is  of  personal  interest 
to  every  one  in  business  to  bring  into  existence  such  a  useful 
institution. 

There  are  in  the  United  States  101  organizations  interested 
in  foreign  trade.  But  these  have  more  than  80,000  members, 
a  large  number  of  whom  are  probably  interested  in  the  business. 
If  only  one-fifth  were  willing  to  subscribe  at  the  rate  of  $1,000 
each  the  entire  capital  would  be  promptly  taken  up. 

With  a  capital  of  $15,000,000  turned  over  two  or  three  times 
a  year  (the  life  of  a  foreign  draft  is  between  90  and  120  days), 
and  with  the  aid  of  the  bank's  credit  through  its  branches  and 
agencies,  a  total  volume  of  business  aggregating  about  $50,000,000 
per  annum  could  be  handled. 

Reasonable  earnings  upon  this  volume  of  business  would 
not  be  sufficient  to  pay  the  expenses  of  the  network  of  offices 
needed  to  accomplish  the  purposes  of  the  bank.  To  handle  a 
larger  volume  of  trade  additional  funds  would  be  necessary,  and 
these  could  be  raised  by  the  issue  of  short  term  bonds  guaranteed 
by  commercial  paper  in  process  of  collection. 

Issue  of  Bonds 

Banks  are  not  permitted  to  issue  bonds.  It  would  be  neces- 
sary to  obtain  an  act  of  Congress  to  receive  authority  to  do  this. 
As  this  institution  would  not  receive  deposits,  nor  would  it  trans- 
act any  other  kind  of  domestic  business,  such  authority  would 
not  necessitate  the  safeguards  that  are  provided  for  by  the  Na- 
tional Bank  Act.  Its  purpose  being  so  beneficial  to  the  country 
at  large,  there  seems  to  be  no  doubt  that  Congress  would  consent 
and  grant  the  application. 

Bonds,  such  as  are  contemplated,  would  be  readily  salable. 
They  would  be  protected  by  the  best  possible  guarantee  in  exist- 
ence, since  goods  exported  are  goods  sold,  and  this  means  gold 
forthcoming  within  a  short  time.  Goods  exported  ninety-nine 
times  out  of  a  hundred  are  paid  for  without  fail,  because  they 
represent  commodities  needed,  which  have  been  ordered,  to  be 
paid  for  within  an  average  of  ninety  days. 

If  savings  banks  and  others  are  allowed  to  carry  these 

287 


Fifth  Session — Tuesday  Afternoon 


bonds  (and  there  is  no  reason  why  they  should  not),  there  would 
be  a  permanent  demand  for  them.  The  public  also  would  invest 
in  these  bonds  without  fear,  as  they  would  have  the  evidence 
that  they  were  not  based  on  artificial  guarantees  or  property  in- 
flated in  value,  but  on  actual  gold  in  transit  or  its  equivalent.  An 
issue  of  $100,000,000  earning  five  per  cent,  per  annum,  payable 
quarterly  or  half-yearly,  and  maturing  in  from  six  months  to  five 
years,  would  have  a  ready  market  at  all  times. 

With  $100,000,000  in  cash  the  bank  could  handle  about  $200,- 
000,000  more  of  business  during  the  year.  This  added  to  the  $50,- 
000,000  which  it  could  handle  with  its  own  capital,  would  make 
a  total  volume  of  business  of  $250,000,000  per  annum,  which 
would  be  scarcely  six  per  cent,  of  the  total  foreign  trade  of  the 
United  States;  ten  per  cent,  of  its  exports,  and  only  about  one- 
fifth  (1-5)  of  the  amount  handled,  at  present,  without  the  inter- 
ference of  any  American  banking  interests. 

Assets  and  Liabilities 

The  assets  of  the  bank  would  consist  only  of : 

(a)  Cash  with  bankers, 

(b)  Bills  of  exchange, 

(c)  Advances  on  foreign  accounts,  and 

(d)  Bills  receivable,  indispensable  to  its  business,  and  its 
liabilities  (besides  its  capital  stock)  of 

(e)  Short  term  bonds, 

(f)  Money  received  in  process  of  remittance, 

(g)  Acceptances  against  shipments  or  collections,  and 
(h)  Bills  payable,  indispensable  to  its  business. 

Before  the  war  the  foreign  trade  of  the  United  States 
amounted  to  about  $4,200,000,000  per  annum,  of  which  $2,400,- 
000,000  were  exports  and  $1,800,000,000  were  imports.  It  was 
largely  handled  by  foreign  banks.  American  banks  had  only  a 
small  portion  of  the  business,  and  then  mostly  in  conjunction 
with  foreign  institutions. 

Some  bills  drawn  for  imports  into  the  United  States  were 
collected  by  American  banks,  but  they  were  financed  by  foreign 
banks  abroad.  Bills  drawn  in  the  United  States  for  exports  were 
handled  largely  by  agencies  of  foreign  banks,  and  collected  abroad 
by  same,  excepting  a  portion  of  the  finance  or  commercial  drafts 
drawn  on  London,  Paris,  and  a  few  other  European  cities. 

The  volume  of  business  with  European  countries  entirely 
outside  the  range  of  American  banks,  amounted  to  more  than 

288 


American  Banking  Abroad — An  Independent  Bank 

$300,000,000  per  annum.  Business  with  other  parts  of  the  world, 
where  there  were  no  American  banking  interests  at  all,  amounted 
to  about  nine  hundred  and  fifty  million  dollars  per  annum  ($950,- 
000,000)  as  follows:  South  America,  $350,000,000;  North  and 
Central  America,  excluding  Cuba,  Canada  and  Mexico,  $100,000,- 
ooo ;  Africa,  $50,000,000;  Asia,  $350,000,000;  and  Australia, 
$100,000,000.  Of  the  remaining  $3,000,000,000,  about  two-thirds 
were  handled  by  European  banks. 

The  war  has  changed  these  figures  substantially.  Our  ex- 
ports may  now  be  estimated  at  about  $3,500,000,000,  and  our  im- 
ports about  $1,500,000,000.  But  this  is  only  temporary,  and  when 
normal  conditions  are  again  restored  we  may  see  the  figures  go 
back  to  what  they  were.  We  might  just  as  well  hope  so. 

Profits 

Profits  on  the  handling  of  foreign  drafts  do  not  come  from 
the  nominal  commissions  charged,  nor  from  the  interest  earned 
on  the  investment,  so  much  as  from  the  exchange  gain,  at  home 
and  abroad. 

Drafts  for  shipments  from  the  United  States  were  drawn 
in  (i)  American  money;  (2)  money  of  the  country  of  destination, 
or  (3)  other  foreign  money. 

When  drawn  in  American  money  the  discounting  bank  in  the 
United  States  earned  interest  for  the  time  its  money  was 
invested  (as  a  rule  overtime  in  considered),  and  a  small  collect- 
ing commission  which  went  partly  or  in  whole^to  its  foreign  cor- 
respondent. But  the  collecting  bank  abroad  made  the  exchange 
profit  in  converting  American  money  into  the  money  in  which  the 
bill  was  paid.  Such  banks  charged  acceptors,  for  this  conversion, 
the  rate  of  exchange  at  which  they  sold  drafts  on  the  United 
States  or  other  countries;  but  when  buying  exchange  from  the 
public  they  paid  lower  rates.  The  difference  between  the  buying 
and  the  selling  rates  represent  the  profit  in  exchange.  This  profit 
was  usually  close  to  the  country's  "gold  point,"  and  allowed  a 
margin  of  between  one  and  two  per  cent. 

When  drafts  were  drawn  in  the  money  of  destination  the 
discounting  bank  in  the  United  States  made  the  profit  in  exchange 
on  converting  said  money  into  American  money,  as  well  as  earn- 
ing interest  on  the  investment ;  it  sometimes  shared  in  the  collect- 
ing commission.  Exchange  profits  in  this  case  were  not  less  than 
one  per  cent,  on  the  average. 

289 


Fifth  Session — Tuesday  Afternoon 


When  drafts  were  drawn  in  other  foreign  money  there  was 
a  chance  for  both,  the  discounting  bank  in  the  United  States  and 
the  collecting  bank  abroad,  to  make  exchange  profits.  Interest 
accrued  to  the  bank  investing  the  money.  In  no  case  do  these 
profits  average  less  than  one  per  cent. 

On  a  volume  of  business  amounting  to  $250,000,000  per  an- 
num the  bank  could  well  expect  to  earn  an  average  of  one  per 
cent.,  or,  say,  $2,500,000. 

Commissions  for  collecting  drafts  vary  from  one-twentieth 
of  one  per  cent,  up  to  two  and  three  per  cent.  An  average  of  one 
quarter  of  one  per  cent,  would  be  a  safe  estimate,  and  would  rep- 
resent on  a  total  volume  of  business  of  $250,000,000,  at  least 
$625,000. 

The  rate  of  interest  charged  on  discount  of  foreign  drafts  is, 
as  a  rule,  six  per  cent,  per  annum.  The  amount  to  be  permanently 
invested  by  the  bank  would  be  $15,000,000  of  its  capital  and  $100,- 
000,000  from  bond  issue.  Allowing  about  $2,000,000  to  be  idle, 
there  would  be  invested  at  all  times  $113,000,000,  which,  at  six  per 
cent.,  would  earn  not  less  than  $6,780,000. 

In  all,  the  bank  profits  should  amount  to : 
GROSS  EARNINGS. 

Profits  in  exchange  on  $250,000,000  at  i% $2,500,000 

Collecting  commission  on  $250,000,000  at  Y^% 625,000 

Interest  on  $113,000,000  invested  at  6% 6,780,000 

$9,905,000 
EXPENSES. 

Salaries,  rent  of  offices,  and  others $3,600,000 

Interest  on  $100,000,000  at  5% 5,000,000      $8,600,000 


Net  profits $1,305,000 

This  would  enable  the  bank  to  pay  a  cash  dividend  of  four 
per  cent,  to  stockholders  ($600,000),  leaving  a  surplus  accumu- 
lating fund  of  $705,000  per  annum. 

These  figures  do  not  include  commissions  for  collecting  drafts 
without  advance  of  money,  on  which  exchange  profits  would  be 
made  at  destination,  nor  fees  for  services.  These  fees  should  be 
very  reasonable  and  rendered  to  all,  stockholders  or  not,  the 
former  being  granted  a  reduction  on  general  rates  or  up  to  a 
certain  amount  free  of  charge. 

Character  of  Profits 

Profits  would  not  be  made  at  the  expense  of  American  trade 
nor  against  foreign  buyers,  as  no  additional  charges  are  con- 

290 


American  Banking  Abroad — An  Independent  Bank 

templated.  Shippers  would  pay  no  more  than  what  they  are  pay- 
ing now  for  interest  and  collecting  commissions,  nor  would  they 
sell  their  drafts  for  less  value  than  they  obtain  at  present.  Their 
foreign  customers  would  not  pay  for  exchange  any  more  than 
what  they  pay  at  present  to  foreign  banks  which  collect  drafts 
drawn  against  them.  These  profits  would  be  taken  from  foreign 
banks,  sharing  in  the  business  they  do  in  handling  American 
trade. 

The  volume  of  business  would  grow  every  year,  and  so 
would  the  profits  of  the  bank.  Any  further  capital  needed  to 
handle  a  larger  volume  of  business  could  be  raised,  either  by  in- 
creasing the  capital  stock  or  by  increasing  the  issue  of  bonds. 

The  growing  surplus  fund  would  add  to  the  value  of  the 
bank's  stock  at  the  rate  of  at  least  four  per  cent,  per  annum,  so 
that  stockholders  would  earn  four  per  cent,  in  cash  dividends, 
four  per  cent,  in  increased  book  value,  and  whatever  amount  of 
free  service  was  determined. 

No  Conflict  With  Existing  American  Banking  Interests 

The  projected  bank  would  not  conflict  with  any  American 
interests  in  this  line,  as  none  of  the  present  banks  covers  the  same 
ground.  Even  if,  following  the  provisions  of  the  recent  reform  of 
the  National  Banking  Act,  National  banks  open  branches  in 
foreign  countries,  their  action  would  be  more  or  less  the  same  as 
that  of  the  branches  of  European  banks:  viz.,  to  earn  profits  in 
exchange,  to  turn  over  local  money,  and  to  receive  the  value  of 
drafts  the  payees  of  which  were  willing  to  pay. 

Then,  the  figures  given  before  refer  to  scarcely  six  per  cent. 
of  the  normal  volume  of  American  foreign  trade  ($250,000,000) 
there  remaining  more  than  $4,000,000,000  worth  of  business  to 
be  handled  by  other  banks.  Therefore,  there  is  room  for  all. 
But  this  bank  would  do  what  none  of  the  others  could  or  would 
undertake :  that  is,  the  direct  care  of  the  American  exporters'  in- 
terests in  general. 

The  bank  would  not  interfere  in  the  exchange  market,  nor 
in  any  of  the  several  other  banking  activities  at  home;  and  it 
would  not  receive  deposits.  It  would  not,  then,  be  in  any  way  a 
disturbing  factor,  but  might  rather  advance  the  business  of  other 
American  banks  by  bringing  to  them  some  of  the  business  done 
at  present  by  agencies  of  foreign  institutions. 

Promotion  of  American  Interests  Abroad 

The  bank  would  not  directly  promote  any  enterprise  in  foreign 
countries,  nor  would  it  invest  therein.  But  the  information 

291 


Fifth  Session — Tuesday  Afternoon 


gathered  through  its  offices  would  be  offered  to  the  American 
public,  affording  an  opportunity  for  the  employment  of  American 
activity  and  consumption  of  American  materials.  Its  interference 
would  be  limited  to  the  commercial  transactions  following. 

The  bank  would  be  a  unique  institution,  there  being  nothing 
like  it  in  any  other  country.  But  this  is  no  reason  why  it  should 
not  be  established.  There  are  many  other  features  of  American 
business  not  duplicated  elsewhere. 

LUDWIG  NISSEN,  JAMES  MAYNARD. 

Chairman.  V.  GONZALES. 


THE  CHAIRMAN:  As  Mr.  Gonzales  has  suggested,  if  anyone 
has  any  questions  to  ask  upon  the  subject  upon  which  he  has  just 
spoken  he  will  be  glad  to  consider  them.  The  meeting  is  now  open 
to  discussion  of  this  question. 

MR.  FLEMING:  I  would  beg  leave  to  ask  a  question,  Mr. 
Chairman.  I  venture  to  moot  the  question  for  consideration  at 
probably  some  other  time  as  to  how  far  it  would  be  possible  to 
extend  the  credits  that  are  needed  for  our  foreign  trade  without 
interfering  with  domestic  credits. 

The  thought  that  I  had  in  mind  was  that  if  we  con- 
centrated enough  money  at  the  great  centers  from  which  there 
would  go  out  these  credits  that  were  necessary  to  promote  our 
foreign  trade,  there  might  be  danger  of  taking  away  those 
credits  that  might  be  necessary  for  the  promotion  of  our  do- 
mestic trade. 

The  question  I  wanted  to  submit  to  the  speaker  is  this: 
Whether  or  not  his  plan  would  avoid  the  difficulty  that  was  in 
my  mind. 

MR.  GONZALES:  I  think  that  we  have  enough  sources  of 
credit  in  this  country  to  cover  what  we  need,  a  hundred  times  over. 
With  the  new  machinery  put  in  operation  by  the  Federal  Reserve 
banks,  so  long  as  you  have  something  good  to  put  behind  it,  you 
can  go  unlimitedly.  Besides,  you  see,  the  money  is  not  going 
away  from  this  country.  The  great  thing  in  advancing  the  money 
for  shipments  is  that  we  leave  the  money  here.  You  only  send 
out  the  merchandise. 

MR.  FLEMING:  My  point  was  that  you,  perhaps,  thought 
these  bonds  should  of  themselves  form  the  basis  of  an  issue  of 
currency. 

MR.  GONZALES  :  No. 

MR.  FLEMING  :  Not  at  all  ? 

292 


Discussion  of  Papers  on  Banking 


MR.  GONZALES  :  No,  no.  Investment  4  or  5  per  cent,  bonds. 
You  see,  $100,000,000  is  a  drop  in  the  bucket  in  this  country. 
There  would  be  business  for  all  the  banks,  because  we  are  only 
looking  for  $250,000,000  of  volume  of  business.  That  is  10  per 
cent,  of  the  export  and  6  per  cent,  of  the  total  trade.  There  would 
be  94  per  cent,  of  the  trade  left  for  the  other  banks. 

But  the  thing  is  the  having  of  this  bank,  with  offices  all  over 
the  world.  You  would  have  this  service  all  over  the  world, 
furnishing  credit  information,  collecting,  taking  care  of  the  goods, 
reporting  on  opportunities  of  trade,  when  the  system  could  be 
fully  put  into  operation. 

MR.  FLEMING:  Yes.  Of  course,  you  have  studied  this  sub- 
ject and  I  am  merely  asking  for  information;  but  I  have  been 
lately  told  by  some  people  who  profess  to  be  acquainted  with  the 
conditions  of  credits  in  the  interior  of  the  country  and  in  the 
West  that  there  has  been  a  lack  of  credits,  that  the  banks  were 
not  able  to  meet  the  demands  that  were  made  for  credit. 

Now,  what  I  was  asking  was  whether  it  would  not  be  pos- 
sible, in  providing  the  credits  for  these  foreign  nations  under 
your  scheme  or  any  other  scheme,  to  in  some  way  provide  those 
credits  without  interfering  with  the  credits  that  are  necessary 
for  the  domestic  trade. 

To  take  the  blood  out  of  the  veins  and  arteries  of  one  por- 
tion of  the  body  and  put  them  in  another  portion,  however  de- 
pleted that  portion  may  be,  may  be  dangerous ;  if  you  supply  the 
necessary  blood  in  that  arm  where  there  is  need  for  more  blood, 
at  the  expense  of  the  other  arteries  and  veins,  you  do  good  in 
one  way  but  you  do  harm  in  another. 

I  do  not  know  whether  or  not  the  gathering  together  of  the 
money  that  would  be  necessary  to  support  the  credits  for  this 
vast  extension  of  foreign  trade,  which  is  so  much  needed,  would 
react  upon  the  domestic  credits  or  not ;  and  my  question  was  as  to 
whether  or  not  your  plan  involved  the  difficulties  that  might  be 
created  by  a  congestion  of  the  necessary  money  for  this  purpose 
in  some  channels  at  the  expense  of  others. 

MR.  GONZALES:  No,  sir;  we  have  no  fear  of  that,  because, 
as  I  say,  we  have  sources  of  credit  in  this  country  that  are  un- 
limited. It  is  like  the  generator  of  electricity,  where  you  are  using 
700  horse-power  and  the  machine  is  capable  of  developing  7,000. 

I  am  glad  to  see,  Mr.  Chairman,  that  all  the  rest  of  the  gen- 
tlemen are  in  accord  with  the  Committee,  anyhow,  as  they  do 
not  say  anything  in  opposition.  (Laughter.) 

293 


Fifth  Session — Tuesday  Afternoon 


THE  CHAIRMAN:  Perhaps  not.     (Laughter.) 

MR.  GONZALES:  It  looks  like  it,  Mr.  Chairman.    (Applause.) 

THE  CHAIRMAN:  According  to  the  program  the  last  three 
subjects,  "Foreign  Branches  of  American  National  Banks,"  "An 
American  Bank  for  Foreign  Trade,"  and  "An  Independent  Bank 
for  Foreign  Trade,"  are  all  open  for  discussion  now.  We  should 
be  glad  to  hear  from  anyone  on  any  one  or  all  of  these  three 
subjects. 

Gentlemen,  we  should  be  very  glad  to  have  you  take  them  up. 
They  are  certainly  live  subjects.  Every  one  of  them  is  a  live  sub- 
ject, and  it  will  add  very  much  to  the  spirit  of  the  meeting  to  keep 
the  ball  rolling  while  it  is  started. 

CAPTAIN  WHITE  :  May  I  ask  a  few  questions  for  information, 
or  state  the  question  as  I  understand  it? 

THE  CHAIRMAN  :  Yes. 

CAPTAIN  WHITE:  The  National  City  Bank  has  already  es- 
tablished branches  in  South  America  for  banking  purposes.  That 
answers  one  of  the  present  needs  of  the  exporter. 

It  is  suggested  by  some  of  the  banks,  by  some  of  the  mem- 
bers of  the  other  banks,  that  instead  of  the  National  City  Bank 
doing  this  on  its  own  responsibility,  the  Banking  Act  be  so 
changed  that  a  combination  of  banks  may  be  formed  for  like 
purposes. 

I  understood  that  Mr.  Gonzales  has  just  proposed  some- 
thing entirely  different,  which  will  not  interfere  either  with  the 
activities  of  the  National  City  Bank  or  the  activities  of  the  na- 
tional bank  which  would  be  formed  by  a  combination  of  banks, 
but  one  that  is  more  of  a  collecting  agency.  Is  my  statement  of 
the  question  correct? 

THE  CHAIRMAN:  That  is  as  I  understand  it.  The  subject 
of  "Foreign  Securities  and  the  American  Investor"  is  put  down 
for  four  o'clock,  and  I  understand  that  we  must  wait  until  that 
hour  before  asking  the  presence  of  the  speaker.  In  the  mean- 
time we  have  with  us  Mr.  George  D.  Iverson,  Jr.,  President  of  the 
American  Belting  Company  of  Baltimore,  and  if  Mr.  Iverson 
will  give  us  a  few  minutes  of  his  time  now  it  will  be  very 
acceptable. 

Address  of  Mr.  Iverson 

MR.  IVERSON:  Mr.  Chairman,  Ladies,  Gentlemen,  Distin- 
guished Visitors,  and  Guests :  As  a  member  of  the  National  As- 
sociation of  Manufacturers  availing  myself  of  the  privilege  to 

294 


Address  of  George  D.  Iverson,  Jr. 


summarize  the  policy  for  the  promulgation  of  foreign  commer- 
cial activities,  from  an  American  manufacturer's  viewpoint,  and, 
I  might  add,  I  can  cite  the  chief  obstacle  which  has  prevented 
thousands  of  American  manufacturers  from  securing  foreign 
business. 

My  occupation,  that  of  a  belt  manufacturer,  affords  fre- 
quent opportunities  to  interview  our  manufacturing  customers 
as  to  the  reason  why  they  had  not  been  able  to  secure  foreign 
business  and  the  reply,  in  99  cases  out  of  100,  has  been  the  same. 

The  company  I  represent  has  expended  much  effort  to  secure 
foreign  trade,  and  I  take  it  this  International  Trade  Conference 
is  assembled  for  the  purpose  of  ascertaining,  if  possible,  the  bar- 
riers which  have  heretofore  prevented  the  American  manu- 
facturer from  securing  America's  share  of  the  world's  trade. 

The  speakers  who  have  preceded  me  for  the  past  two  days, 
have  only  enunciated  to  you  the  methods  to  pursue  to  get  the 
business  and  the  facilities  we  lack  after  the  business  is  secured. 
Now  the  question  arises,  What  is  the  principal  element  in  getting 
business  ? 

My  friends,  let  us  give  the  foreign  buyer  credit  for  having 
common  sense.  That  means  he  appreciates  competition.  Com- 
petition is  the  life  of  trade  whether  in  the  United  States,  the 
Levant  or  Latin  America.  Where  does  the  American  manu- 
facturer find  himself,  and  what  is  he  confronted  with?  The 
primary,  fundamental  problem  of  all  commercial  trade  relations, 
competition;  and  that  the  American  manufacturer  has  been  un- 
able to  meet. 

"Unable  to  meet  competition,"  is  the  answer  given  by  thou- 
sands of  American  manufacturers  interviewed  as  to  why  they 
are  unable  to  secure  foreign  business.  They  state:  "We  have 
sought  it,  but  we  cannot  meet  competition,"  and  why? 

I  have  a  chart  here,  which  I  present  for  your  consideration 
as  the  best  means  to  photograph  on  your  minds  true  conditions, 
demonstrating  from  the  chart,  which  is  divided  into  three  parts, 
Labor,  Materials  and  Expenses. 

The  inner  circle  represents  the  unit  value,  be  that  a  dollar, 
a  pound  sterling,  a  mark,  or  any  recognized  standard  of  value. 
Your  first  cost  is  labor;  labor  governs  cost  of  materials  and  ex- 
penses follow  accordingly.  Advance  the  cost  of  labor;  you  are 
in  another  sphere  and  you  find  a  higher  cost  condition.  Advance 
labor  still  higher,  as  shown  on  the  chart  by  the  outer  circle,  and 
here  you  find  the  condition  in  the  United  States  versus  the  con- 

295 


Fifth  Session — Tuesday  Afternoon 


dition  as  to  relative  unit  values  in  other  countries  in  proportion 
to  labor  costs.  (Indicating  diagram.) 

It  is  an  easy  problem  to  solve.  No  foreign  buyer  is  willing 
to  pay — unless  forced  to,  as  under  the  present  conditions — $2 
to  the  American  manufacturer  for  what  he  can  buy  for  $i  from 
a  competitive  manufacturer  in  another  country.  (Applause.) 

Who  is  responsible  for  this  condition  of  affairs?  The  an- 
swer is — the  American  manufacturer  has  allowed  himself  to 
become  a  victim  of  a  dominated  political  situation. 

Mr.  Woolley  and  my  distinguished  townsman,  Mr.  Bernard 
Baker,  presented  to  you  the  situation  of  our  merchant  marine, 
and  what  the  Administration  plans  for  assistance  in  the  way  of 
a  naval  auxiliary  merchant  marine,  with  which  my  distinguished 
friend  Captain  White  does  not  agree,  and  which  the  gentlemen 
who  have  espoused  its  cause  admit  could  be  only  considered  an 
emergency  relief,  and  a  change  of  administration  could  bring 
about  its  confiscation,  leaving  the  American  manufacturer  to 
find  himself  face  to  face  with  the  same  old  policy,  as  far  as  a 
merchant  marine  is  concerned,  to  which  he  has  been  subjected  for 
the  past  forty  years. 

The  distinguished  representative  from  Russia  who  ad- 
dressed this  Conference  yesterday,  in  his  remarks  brought 
forcibly  and  clearly  to  your  attention  the  real  reason  why  Ameri- 
can manufacturers  have  not  been  able  to  secure  foreign  business. 
I  quote  from  his  remarks :  "Russia  would  welcome  American 
capital"  and  "local  labor  could  be  secured  at  one-quarter  of  the 
value  of  American  labor."  You  will  observe  American  capital 
is  invited  to  Russia,  as  capital  is  welcome  to  any  growing  com- 
munity, but  you  are  advised  that  labor  can  be  furnished  at  one- 
fourth  of  the  value  of  American  labor.  Russia  does  not  want 
American  labor,  because  American  labor  at  its  American  value 
would  prohibit  Russia  meeting  the  competition  of  her  neighbors, 
and  it  was  further  cited  to  you  that  the  reason  the  Germans  had 
succeeded  in  getting  the  Russian  trade  was  due  to  the  fact  that 
they  utilized  this  cheap  labor. 

I  am  not  permitted  to  speak  on  the  war  situation,  but  it  has 
been  stated  that  in  seeking  foreign  trade  we  should  pursue  the 
customs  and  court  the  etiquette  of  the  country.  Therefore,  in 
addressing  American  manufacturers,  may  I  greet  the  American 
manufacturer  in  American  style,  and  the  way  the  American 
manufacturer  likes  to  be  met;  and  that  is  to  get  him  in  a  good 

296 


Address  of  George  D.  Iverson,  Jr. 


humor  by  telling  him  a  good  story,  to  prepare  him  for  what 
might  happen. 

Pat  Flannigan  and  Carl  Schmultz  lived  in  Hogan's  Alley, 
and  had  many  arguments  over  the  supremacy  of  this  hallowed 
spot.  Pat  on  numerous  occasions  patrolled  Carl  Schmultz's  door 
with  a  gun  and  kept  him  indoors. 

As  time  rolled  on  the  patronage  of  Hogan's  Alley  was  con- 
ceded to  Flannigan.  But  one  day,  however,  Flannigan  was 
taken  ill,  and  so  very  sick  was  he  that  a  doctor  was  called  to  his 
bedside,  and  the  doctor,  after  carefully  examining  Pat,  said: 
"Pat,  you're  a  pretty  sick  man;  I  do  not  believe  you  will  live, 
and  if  you  have  any  preparations  you  wish  to  make  I  would  ad- 
vise you  to  prepare." 

"Well,"  said  Pat,  "send  for  the  priest."  The  priest  came 
and  after  greeting  the  sick  man,  said: 

"Pat,  before  I  can  administer  the  last  rites  to  you  to  pre- 
pare you  for  the  other  world  I  must  know  one  thing.  Have  you 
any  enemies  in  the  world?"  "Yes,  Father,"  replied  Pat.  "Carl 
Schmultz  and  myself  haven't  got  along  very  well  together,  and, 
Father,  I  hate  Carl  Schmultz."  "Well,"  said  the  priest,  "you 
must  send  for  Carl  Schmultz  and  tell  Schmultz  that  you  hold  no 
grievance  against  him,  and  ask  him  to  forgive  you."  "Ah!" 
said  Pat,  "I  hate  to  do  that."  "But,"  replied  the  Father,  "you 
must  do  it,  Pat."  "Well,"  said  Pat,  "send  for  Schmultz." 

Schmultz  was  sent  for,  and  when  he  entered  the  sick  cham- 
ber where  Flannigan  was  confined  Pat  looked  up  and  said: 
"Schmultz,  all  the  time  I  kept  you  in  your  house  with  a  gun  and 
wouldn't  let  you  come  out,  and  all  the  time  I  abused  you  to  the 
people  in  Hogan's  Alley  and  had  the  people  follow  me,  I  didn't 
mean  it.  Schmultz,  I  always  thought  you  one  of  my  best  friends, 
and,  Schmultz,  believe  me,  I  want  you  to  know  that  I  love  you, 
I  like  you,  I  think  well  of  you." 

"Ah !"  said  the  Father,  "now,  Pat,  that  is  the  right  spirit,  and 
now  I  feel  I  can  administer  to  you  the  last  rites." 

Schmultz  bowed  himself  out,  and  after  Pat  had  received  the 
Father's  blessing  he  began  to  think  of  all  the  rights  that 
Schmultz  would  succeed  him  to ;  the  right  to  dominate  in  Hogan's 
Alley,  the  right  to  govern  Hogan's  Alley,  and  that  revived  Pat's 
spirit.  The  next  day  when  the  doctor  called  Pat  was  much 
better.  The  doctor  was  surprised  and  said  to  him,  "Why,  Pat,  you 
have  revived  wonderfully ;  I  think  you  will  get  well."  "Ah !"  said 
Pat,  "right  away,  doctor,  send  for  Schmultz,  I  want  to  see  him." 

297, 


Fifth  Session — Tuesday  Afternoon 


Schmultz  was  sent  for  and  came,  and  as  he  opened  the  door 
Pat  sat  up  in  bed  and  said  to  him:  "Schmultz,  you  know  all 
those  things  I  said  to  you  yesterday?"  "Yes,"  said  Schmultz. 
"Well,"  said  Pat,  "Schmultz,  I  want  you  to  understand  one 
thing,  if  I  get  well  that  damn  'bull'  of  yesterday  don't  go." 
(Laughter.) 

Friends,  that  is  about  the  situation  we  are  facing  today  when  it 
comes  to  foreign  trade.  As  soon  as  the  warring  nations  of  Europe 
get  well  the  "bull"  that  is  now  being  handed  to  us  won't  go. 
You  will  find  them  demanding  and  seeking  the  position  they 
formerly  held  in  foreign  trade,  and  if  we,  as  American  manu- 
facturers, are  not  equal  and  not  capable  of  meeting  the  conditions, 
and  the  principal  element,  that  of  competition,  we  cannot  ex- 
pect to  develop  or  hold  foreign  trade. 

Another  obstacle  that  confronts  the  American  manufacturer 
in  developing  his  business  is  the  lack  of  banking  facilities.  We 
have  no  real  American  banks.  We  have  American  money  lenders, 
with  ambition  to  pile  up  surpluses  and  declare  dividends,  and 
whose  whole  interest  and  sole  ambition  is  for  the  American 
banker. 

There  are  other  things  I  should  like  to  present  to  you,  but  my 
time  limit  is  up.  However,  there  is  just  one  other  thought  rela- 
tive to  trade  conditions  I  shall  present. 

As  American  manufacturers  and  business  men  you  have 
learned  that  transportation  utilities  and  banking  facilities  follow 
commercialism  wherever  it  exists.  Subsidy  in  any  form,  it 
matters  not  in  what  way  it  may  be,  is  created  through  a  com- 
mercial situation,  and  the  best  evidence  of  its  application  has  been 
demonstrated  in  our  own  country.  When  the  great  Far  West 
and  Pacific  Coast  offered  advantages  for  development  we  found 
the  government  ready  and  willing  to  aid  our  railroads  by  con- 
ceding rights  of  way,  and  such  other  things  essential  to  enable 
the  financing  of  utility  necessities  to  bring  in  close  and  commer- 
cial touch  the  Atlantic  and  Pacific,  and  the  inland  territory. 
And  when  the  American  manufacturer  takes  matters  within  his 
own  hands  and  is  determined  to  meet  the  situation  you  will  find 
merchant  marine,  banking  and  all  other  elements  that  are  es- 
sential to  the  securing  of  foreign  trade  will  follow;  but  the 
cardinal  feature  the  American  manufacturer  must  acquire  is  to 
control  himself,  and  until  he  can  control  himself — as  a  com- 
petitive factor — he  is  not  in  a  position  to  represent  himself  as 
an  exponent  of  industry  to  others.  There  is  but  one  way  for  the 

298 


Tariff  Discriminations 


American  manufacturer  to  achieve  permanent  success,  and  that 
is  to  demand  and  exercise  an  influence  in  the  element  which  con- 
trols the  meeting1  of  competition  in  the  production  of  the  wares 
and  merchandise  of  the  civilized  world.  That  element  is  labor, 
and  until  American  labor  and  politicians  are  taught  that  mythical 
fantastic  ideals,  which  ultimately  never  materialize,  can  no 
longer  dominate  and  inflate  the  politics  and  business  of  this 
country,  and  that  the  value  of  any  commodity  is  established  by 
competition  and  not  by  theories,  and  you,  as  manufacturers,  the 
bone  of  American  industry,  assert  commercial  rights,  you  can 
never  hope  to  enjoy  foreign  trade  versus  a  foreign  neighbor's 
competition.  I  thank  you.  (Applause.) 


THE  CHAIRMAN  :  We  have  five  minutes  that  anyone  may 
employ  in  the  discussion  of  these  subjects,  or  in  answer  to  the 
arguments  that  have  been  presented  on  either  side. 

HON.  W.  B.  FLEMING  (Foreign  Trade  Adviser  of  the  De- 
partment of  State)  :  Perhaps  this  might  be  an  opportune  time  for 
me  to  inject  into  this  Conference  a  thought  which  has  come  to 
me  since  I  have  been  in  attendance  here  and  examined  your  pro- 
gram. 

You  have  heard  from  the  gentleman  who  last  had  the  floor 
that  the  paramount  question  is  the  control  of  labor.  You  have 
heard  much  on  the  subject  of  transportation  and  the  subject 
of  credits,  and  then  the  practical  point  of  view  was  presented 
to  you  very  ably  by  Doctor  Pratt,  who  is  chief  of  the  Bureau 
of  Foreign  and  Domestic  Commerce  of  the  Department  of  Com- 
merce. 

All  these  phases  of  the  problem  which  you  are  engaged  in 
considering  are  highly  important;  but  there  is  one  phase  of 
the  problem  which  I  have  not  even  heard  so  much  as  suggested 
here,  which  seems  to  be  also  important. 

You  may  do  all  the  other  things  that  you  have  been  pro- 
posing here,  and  do  them  in  the  best  way;  that  is  you  may  suc- 
ceed in  having  them  carried  out,  but  if  you  do,  you  are  still 
going  to  fail  to  your  object  and  end  unless  you  do  one  other 
thing;  and  that  thought  came  to  my  mind  especially,  particularly 
when  Mr.  Moore,  the  ex-Counsellor  of  the  State  Department, 
was  addressing  you  today.  I  very  much  lament  that  we  did  not 
have  the  opportunity  for  some  questions  to  be  propounded  to  Mr. 
Moore,  because  that  would  have  elucidated  the  situation  from  the 
standpoint  which  I  am  now  considering. 

299 


Fifth  Session — Tuesday  Afternoon 


I  say  suppose  you  accomplish  everything  else  that  you  have 
proposed.  What  are  you  going  to  do  if  the  foreign  nations 
discriminate  against  you  and  put  up  prohibitive  tariffs  and  raise 
other  mountains  of  difficulties  which  you  cannot  get  over  ?  How 
are  you  going  to  control  that  situation  ? 

You  observed  that  Mr.  Moore  made  some  reference  to  the 
McKinley  tariff  and  the  provisions  of  that  tariff  that  related  to 
this  subject  that  I  am  now  presenting.  You  noticed  that  he  also 
referred  to  the  Dingley  tariff  and  to  the  so-called  Underwood 
tariff. 

Now,  gentlemen,  you  have  at  present  practically  no  pro- 
tection in  your  tariff  law  of  today  at  all  against  the  difficulties 
to  which  I  have  alluded.  The  law  provides  that  the  Govern- 
ment of  the  United  States  may  negotiate  commercial  agreements 
or  conventions  with  other  nations  and  then  submit  the  proposals 
to  the  Congress  of  the  United  States  for  its  consideration;  so 
that  you  can  make  no  commercial  agreement  at  all  except  upon 
the  approval  of  both  houses  of  Congress. 

No  negotiations  have  been  undertaken  by  reason  of  the  con- 
templation that  seemed  to  have  been  in  view  from  that  section  of 
the  law;  and  for  a  very  good  reason,  and  that  is  that  you  are 
powerless  to  protect  the  manufacturers  of  this  country,  the  export- 
ers of  this  country,  until  you  have  some  amendment  to  that  law. 

In  every  case  where  the  matter  has  been  presented  to  the 
foreign  governments,  and  objection  made  to  the  discriminations 
and  partiality  and  favors  shown  to  others  at  the  expense  of 
the  exporters  of  the  United  States,  and  it  was  pointed  out  to 
those  countries  that  the  United  States  had  been  wonderfully 
good  in  the  last  tariff  act  and  had  lowered  the  tariffs,  and  where 
that  argument  was  followed  up  with  statistics  showing  what  that 
meant  to  those  countries  and  how  much  advantage  they  had  got- 
ten by  reason  of  it,  how  their  trade  with  this  country  had  in- 
creased and  how  the  duties  that  were  paid  upon  their  goods  had 
been  lessened,  that  appeal  fell  flat.  In  no  instance  has  any  of 
the  governments  said:  "You  have  been  good  to  us  and  now,  in 
return,  we  are  going  to  be  good  to  you." 

In  every  instance  the  reply  was:  "We  won't  consider  what 
you  have  done,  but  the  supreme  question  with  us  is:  What  are 
you  going  to  do?" 

They  say:  "You  are  now  asking  something  of  us.  It  does 
not  make  any  difference  whether  it  is  right  or  just  or  not.  We 
are  not  considering  that.  We  are  considering  the  interests  of  our 

300 


Foreign  Securities  and  the  American  Investor 

country,  and  we  want  to  know  what  you  are  going  to  give  us 
in  return  for  what  you  are  asking?"  That  is  the  question. 

I  want  to  say  to  you  that  you  will  soon  have  to  make  com- 
mercial agreements  with  practically  all  the  nations  of  the  earth, 
as  has  been  pointed  out  to  you  by  the  speakers  who  have  gone 
before,  and  you  are  going  to  come  up  against  all  the  nations  of 
the  earth;  and,  unless  you  are  able  to  be  protected  in  those 
negotiations  all  your  labors  here  will  be  largely  in  vain,  Mr. 
Chairman. 

I  am  sorry  not  to  find  upon  your  program  something  which 
indicates  that  you  have  been  making  a  study  of  this  important 
question  and  that  recommendations  are  not  to  be  considered  upon 
that  line. 

Mr.  Chairman,  the  Congress  of  the  United  States  is  now  in 
session,  and  you  have  no  time  to  lose  in  regard  to  this  matter. 
It  goes  without  saying,  gentlemen,  that  as  Foreign  Trade  Ad- 
viser of  the  State  Department,  I  have  given  some  study  to  this 
subject.  This  is  not  the  time  or  the  occasion,  and  certainly  I 
would  not  have  the  opportunity  if  it  were,  to  present  to  you 
my  views  upon  that  subject;  but  let  me  suggest  to  you,  Mr.  Chair- 
man, that,  if  it  be  possible,  you  yet  consider  the  question  of 
having  some  committee  consider  what  should  be  done  along  this 
line,  and  have  their  recommendations,  well  considered  and  made, 
presented  to  the  State  Department  and  to  the  Congress  of  the 
United  States  before  matters  become  absolutely  crystallized  there. 
(Applause.) 


THE  CHAIRMAN  :  The  next  speaker  is  a  man  known  to  all  of 
you  by  reputation,  representing  the  well-known  banking  firm 
of  Kuhn,  Loeb  &  Company.  Mr.  Schiff  has  been  kind  enough 
to  present  a  paper  on  the  subject  of  "Foreign  Securities  and  the 
American  Investor,"  a  subject  which  we  all  recognize  as  of  im- 
mense importance  at  this  time,  because  the  country  is  becoming 
a  lending  country  instead  of  a  borrowing  country,  and  Mr.  Schiff 
is  well  posted  on  matters  of  investments  in  foreign  countries  and 
in  the  United  States,  and  his  banking  firm  has  been  one  of  the 
foremost  elements  in  the  financing  of  many  of  our  public  institu- 
tions and  in  securing  large  amounts  of  foreign  capital  for  in- 
vestment in  the  United  States. 

I  take  great  pleasure  in  introducing  to  you  Mr.  Mortimer  L. 
Schiff.  (Applause.) 

301 


Fifth  Session — Tuesday  Afternoon 


Foreign   Securities  and   the  American    Investor 

By  MORTIMER  L.  SCHIFF, 

Of  Kuhn,  Loeb  &  Co.,  New  York 

Much  is  being  said  and  written  at  the  present  time  re- 
garding the  increasing  part  which  it  is  hoped  this  country  may 
be  able  to  play  in  financing  the  needs  of  foreign  countries, 
and  especially  those  of  South  and  Central  America.  It  is 
particularly  appropriate  that  at  an  International  Trade  Confer- 
ence held  under  the  auspices  of  the  National  Association  of 
Manufacturers  consideration  should  be  given  to  this  subject, 
as,  while  it  is  a  fact  that  trade  follows  the  flag,  it  is  equally 
true  that  preference  in  trade  is  naturally  given  to  those  who 
will  also  finance  the  transactions.  The  supremacy  of  European 
countries  in  foreign  trade  and  the  intensive  development  by 
them  of  this  field  of  enterprise,  have  been  primarily  due  to  the 
facilities  extended  to  foreign  merchants  for  financing  their  pur- 
chases in  the  country  with  which  they  were  dealing.  With  the 
advent  of  the  Federal  Reserve  System  and  certain  developments 
due  to  the  war,  dollar  exchange  has  begun  to  establish  itself,  and 
it  is  to  be  hoped  that  as  a  result  great  impetus  may  be  given  to 
foreign  trade  in  this  country. 

Classification  of  International  Financing 

International  financing  may  be  divided  into  three  classes  of  in- 
vestments, or  advances  of  credit,  namely : 

1 i )  Government  loans,  including  those  to  States  and  munici- 
palities. 

(2)  Obligations  and  shares  of  transportation,  industrial  and 
public  service  corporations. 

(3)  Commercial  credits  and,  generally,  the  financing  of  pur- 
chases and  sales  of  goods  and  commodities. 

With  the  third  category  this  paper  does  not  propose  to  deal, 
as  these  are  purely  banking  transactions  in  which  the  investor  has 
only  an  indirect  interest,  and  it  will,  therefore,  be  restricted  to 
describing  some  of  the  conditions  regarding  foreign  securities  in 
this  country  and  to  pointing  out  some  of  the  more  important 
requisites  necessary  to  make  such  securities  suitable  for  our 
markets.  The  average  investor  naturally  prefers  investing  his 

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money  in  his  own  country,  and  as  a  rule  can  only  be  induced 
to  go  outside  of  that  field  because  of  unsatisfactory  interest 
return  on  domestic  securities  or  because  of  some  collateral  ad- 
vantage, such  as  developing  trade,  or  because  of  sentimental 
reasons. 

Public  Interest  in  Foreign  Securities 

Before  describing  conditions,  as  they  now  exist,  it  may  be  of 
interest  to  review  briefly  and  in  a  general  way  what  has  thus  far 
been  done  to  interest  our  investing  public  in  securities  of  other 
countries,  or  of  foreign  corporations,  and  what  appear  to  have 
been  the  guiding  reasons  for  doing  so.  The  period  prior  to  the 
outbreak  of  the  European  war  must  be  treated  separately  from 
that  which  has  elapsed  since,  as,  to  a  great  extent,  different  con- 
ditions have  governed  since  that  time.  Coincident  with  the  re- 
covery from  the  depression  of  1893,  an(^  ^ie  industrial  develop- 
ment which  took  place  in  the  late  nineties,  such  an  accumulation 
of  wealth  took  place  that  investment  securities  sold  at  unprece- 
dented prices  and  yielded  but  a  very  moderate  return.  As  a  result 
the  seeking  of  new  markets  for  idle  funds  naturally  developed, 
and  attempts  began  to  be  made  to  interest  our  public  in  foreign 
securities  yielding  a  higher  return  than  that  at  which  domestic 
securities  of  equal  quality  could  be  secured.  The  placing  of 
foreign  securities  in  this  country  is  thus  no  recent  development, 
and  various  opportunities  have  been  offered  during  the  past 
fifteen  years,  and  even  earlier,  to  our  public  to  make  such  invest- 
ments. In  this  way  there  were  sold  in  this  country,  prior  to 
August,  1914,  considerable  amounts  of  foreign  securities,  includ- 
ing some  of  industrial  enterprises.  These  latter  have,  however, 
to  a  great  extent,  been  privately  placed,  and  the  public  offering 
has  been  almost  entirely  restricted  to  bonds  of  governments  and 
municipalities,  or  securities  having  a  government  guarantee,  ex- 
cept in  the  case  of  securities  of  Mexican  railways. 

Foreign  Loans 

Among  the  larger  loans  provided  by  this  country  have  been 
those  to  Mexico  and  its  enterprises,  in  1899,  1904,  1906,  1908, 
1909  and  1913;  to  Japan  in  1904,  1905  and  1907;  to  Germany  in 
1900;  to  the  City  of  Frankfort  in  1901 ;  to  Cuba  in  1904,  1909  and 
early  in  1914^0  San  Domingo  in  1908  and  1913,^0  San  Paulo  in 
1907  and  1908 ;  to  Argentina  in  1909 ;  to  China  in  1911 ;  to  Liberia 

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Fifth'^Session —  Tuesday  Afternoon 


in  1912;  to  Austria  in  1912,  and  to  the  City  of  Tokio  in  1912. 
But  it  may  be  of  interest,  without  going  into  detail  as  to  all 
of  them,  to  briefly  describe  the  considerations  which  made  some 
of  the  more  important  of  these  issues  suitable  for  offering  to 
our  public.  For  instance,  during  1904  and  1905,  the  period  of 
the  Japanese-Russian  war,  over  $200,000,000  of  Japanese  Gov- 
ernment bonds  were  offered  to  investors  in  this  country  and 
met  with  a  very  cordial  reception.  Much  of  the  success  of 
these  issues  was  doubtless  due  to  the  sympathy  which  the 
American  people  had  at  that  time  with  the  Japanese  in  their 
struggle  with  Russia,  as  was  shown  by  the  avidity  with  which 
small  investors  all  over  the  country  subscribed  for  the  bonds. 
This  was  also  due  to  the  fact  that  the  bonds  were  exceptionally 
well  secured,  yielded  a  high  return  and  sold  at  a  premium 
after  their  issue,  so  that  it  became  a  profitable  transaction  to 
subscribe  to  the  successive  issues.  Furthermore,  the  loans  placed 
in  this  country  formed  part  of  larger  issues,  which  were  simul- 
taneously placed  in  European  countries,  and  were  payable  in 
various  currencies,  so  that  a  world-wide  market  was  secured. 
This  latter  is  one  of  the  most  important  considerations  which 
governed  the  placing  of  foreign  securities  during  the  period  prior 
to  the  war  and  constituted  one  of  the  greatest,  if  not  the  greatest, 
inducement  to  the  American  investor.  By  buying  a  bond  payable 
as  to  principle  and  interest  not  only  in  dollars,  but  also  in  sterling, 
francs  and  marks,  and  listed  and  dealt  in  on  the  principal  stock 
exchanges  of  the  world,  he  received  the  assurance  that  when  he 
desired  to  sell  he  could  seek  the  most  favorable  market.  It  was 
to  be  presumed  that  if  there  was  financial  stringency  here  con- 
ditions would  be  better  in  London,  Paris  or  Berlin,  and  interna- 
tional securities  would  be  salable,  when  purely  domestic  ones 
might  not  be.  The  best  example  of  this  is  the  fact  that  during 
existing  conditions  in  Europe  the  one  class  of  securities  upon 
which  investors  there  have  been  able  to  realize  without  difficulty 
have  been  their  holdings  of  American  securities.  This  has  been 
of  great  assistance  to  their  governments,  who  have  thus  been  able 
to  secure  balances  here  for  financing  at  least  a  portion  of  their 
needs  in  this  country.  As  a  matter  of  fact,  a  very  large  part  of 
issues  of  this  nature  made  prior  to  the  war  were  sold  by  American 
holders,  and  while  no  definite  figures  are  available,  there  is  little 
question  that  a  very  large  portion  of  these  loans  gradually  drifted 
to  Europe,  and  that  at  the  outbreak  of  the  war  only  a  compara- 
tively small  portion  was  still  held  here.  In  other  words,  the  pur- 

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Foreign  Securities  and  the  American  Investor 

chase  of  foreign  securities  of  this  nature  in  this  country  was 
rather  spasmodic  in  character  and  due  to  temporary  conditions, 
which  led  our  investors  to  invest  temporarily  some  of  their  funds 
in  such  securities.  A  certain  amount  of  foreign  securities  have 
been  absorbed  by  insurance  companies,  who  required  these  for 
investment  on  account  of  laws  of  foreign  countries  in  which  they 
operate,  but  the  individual  investor  has  apparently  bought  them 
more  as  a  speculation  than  as  a  permanent  investment. 

Financing  Latin  America  and  China 

The  participation  of  this  country  in  financing  Mexico  and  its 
railways  and  industries  has  been  somewhat  different  in  character. 
Here  we  have  a  case  of  a  country  very  near  us  and  it  was  natural 
that  our  public  should  take  an  interest  in  its  development.  The 
principal  railway  system  was  in  fact  originally  an  American  cor- 
poration, and  its  securities  were  largely  held  here.  The  Govern- 
ment of  Mexico  seemed  permanent  in  character  and  its  transpor- 
tation and  industrial  enterprises  seemed  so  closely  to  approximate 
our  own  that  investors  did  not  differentiate  much  between  them 
and  ours,  except  to  the  extent  of  desiring  a  higher  return  on  the 
money  invested.  When  troubled  conditions  arose,  European 
countries  did  not  wish  to  advance  any  more  money  to  Mexico 
unless  this  country  also  participated,  as  it  was  felt  that  we  had 
so  particular  a  relation  to  the  situation  there  that  our  participa- 
tion was  almost  an  absolutely  necessary  condition  to  anybody  in- 
teresting themselves  in  the  affairs  of  that  unhappy  country. 

China  and  San  Domingo  again  had  different  reasons  for  the 
appeal  being  made  to  American  investors.  In  China  it  was,  to  a 
great  extent,  to  help  our  diplomacy  and  to  furnish  this  country 
with  the  same  facilities  as  were  at  the  disposal  of  others.  All  the 
European  governments  had  financial  groups  upon  whom  they 
could  rely  and  upon  whose  cooperation  they  could  count  to  main- 
tain their  sphere  of  influence.  It  was  to  place  this  country  in 
the  same  favorable  position  in  having  its  share  in  the  develop- 
ment of  China,  and  the  maintaining  of  the  open  door  and  free 
opportunity  for  all,  that  American  bankers  took  up  the  question 
of  Chinese  financing. 

In  San  Domingo  it  was  a  case  of  our  government  taking  hold 
directly  of  the  readjustment  of  the  debt  of  that  country  and 
bringing  order  out  of  chaos,  and  American  investors  were  found 
to  provide  the  funds  necessary  to  assist  our  government  in 
doing  so. 

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Fifth  Session — Tuesday  Afternoon 


Effect  of  European  War 

With  the  advent  of  the  European  war  a  different  condition 
arose.  European  markets  being  closed,  foreign  countries  and 
enterprises  have  naturally  turned  to  us  to  finance  their  needs. 
The  moment  was  opportune  for  this  on  account  of  the  ease  of  our 
money  markets  and  the  large  amount  of  capital  available;  but 
even  in  the  case  of  countries  not  directly  engaged  in  the  war 
high  rates  of  interest  have  had  to  be  paid  to  induce  the  American 
investor  to  respond.  Practically,  all  the  loans  to  European  coun- 
tries, both  belligerent  and  neutral,  have  been  conditioned  upon 
the  requirement  that  at  least  a  substantial  part  of  the  proceeds 
should  be  expended  in  this  country,  and  have  thus  had  as  their 
main  purpose  the  financing  of  our  export  trade.  In  this  connec- 
tion it  should  be  stated  that  it  has  been  the  practice  of  European 
countries,  and  particularly  France  and  Germany,  to  insist  when 
making  foreign  loans  that  a  large  part  of  the  proceeds  should  be 
spent  in  the  lending  country.  This  has  gone  so  far  as  to  be  made 
a  condition  by  the  governments  precedent  to  approving  the  listing 
of  such  securities  on  the  stock  exchanges.  Among  the  loans 
placed  publicly  in  this  country  since  the  outbreak  of  the  war  have 
been  those  to  Sweden,  Norway,  Switzerland,  Panama,  Argentina, 
Italy,  France,  England,  Canada  and  various  Canadian  provinces 
and  municipalities.  They  have  taken  as  a  rule  the  form  of  short 
term  loans,  and  as  they  have  been  made  to  meet  a  special  condi- 
tion existing  at  the  present  time  they  can  hardly  be  considered  as 
indicating  a  permanent  participation  in  financing  the  needs  of  all 
of  these  countries. 

Influence  of  Return  of  Normal  Conditions 

When  normal  conditions  are  restored  it  is  to  be  assumed  that 
these  countries,  with  the  possible  exception  of  Canada  and  those 
of  South  and  Central  America,  will  be  able  to  finance  their  needs 
again  at  home,  or  in  the  markets  to  which  they  have  been  accus- 
tomed. As  regards  South  and  Central  American  countries,  which 
have  turned  to  us  to  provide  their  requirements  when  they  found 
it  impossible  to  raise  money  in  Europe,  they  have  been  accus- 
tomed to  rely  upon  foreign  loans  and  will  probably  be  in  that 
position  for  some  time  to  come.  In  their  case  it  is  to  be  hoped 
that  by  a  process  of  education  our  investors  may  come  to  have 
a  sufficient  knowledge  of  such  securities  to  take  an  increasingly 

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Foreign  Securities  and  the  American  Investor 

larger  part  in  financing  such  countries,  and  that  an  influence  may 
thus  be  exercised  and  a  relationship  established  which  may  have 
a  far-reaching  effect  on  our  foreign  trade.  In  that  the  manu- 
facturer and  merchant  must,  however,  do  his  share,  by  being 
willing,  if  need  be,  to  make  some  sacrifices  to  do  business  in 
foreign  countries,  even  if  there  seems  to  be  plenty  of  opportun- 
ity for  him  in  domestic  markets.  Furthermore,  the  American 
investor  must  feel  confident  that  our  government  will  protect  his 
legitimate  investments  in  foreign  countries. 

Government  Support  of  Investors 

It  has  been  a  great  safeguard  to  the  European  investor  that 
he  knew  that  if  a  foreign  country  failed  to  live  up  to  its  engage- 
ments his  government  not  only  was  ready,  but  would  back  him 
up  diplomatically  and  even  otherwise  in  enforcing  his  just  de- 
mands. The  courts  are  not  open  to  international  financing,  as  in 
the  case  of  corporate  enterprises,  and  war  ships  must  unfor- 
tunately take  the  place  of  receiverships  and  foreclosures.  Until  we 
can  feel  certain  that  our  government  will  maintain  the  rights  of 
American  citizens,  who  have  made  legitimate  investments  in  for- 
eign countries,  it  is  hopeless  to  try  to  create  here  a  real  market 
for  foreign  securities.  Experiences,  such  as  American  investors 
have  had  in  Mexico,  where  apparently  nothing  has  been  done  to 
safeguard  their  rights,  not  even  to  the  extent  of  seeing  that  cus- 
toms duties  specifically  pledged  to  bondholders  have  been  made 
available  to  them,  does  more  to  militate  against  foreign  invest- 
ments by  our  public  than  all  talk  of  foreign  trade  and  America  as 
the  eventual  financial  center  of  the  world  does  to  encourage  them. 

No  mention  has  been  made  of  American  investments  in 
foreign  industrial  enterprises,  such  as  mines  located  in  foreign 
countries,  as  for  the  most  part  these  either  are  privately  held,  or 
are  owned  by  American  corporations  and  operated  under  Ameri- 
can management.  They  can,  therefore,  hardly  be  considered  as 
investments  in  foreign  securities. 

Prerequisites  in  Foreign  Securities 

Having  thus  briefly  reviewed,  in  the  most  general  way,  con- 
ditions as  they  have  existed  up  to  the  present  time,  and  as  they 
now  exist,  let  us  see  what  the  necessary  requisites  are  to  make 
foreign  securities  attractive  to  American  investors  and  what  the 
difficulties  are  with  which  issuing  houses  and  bankers  have  to 

307 


Fifth  Session — Tuesday  Afternoon 


contend  and  what  the  problems  are  they  have  to  solve.  It  is  to 
be  assumed  that  loans  to  European  countries  are  temporary  in 
character  and  due  to  momentary  conditions,  and  consideration  of 
the  subject,  therefore,  had  better  be  restricted  to  dealings  with 
countries  of  South  and  Central  America,  which  should  in  future 
form  the  largest  field  for  our  activities.  We  must,  however,  not 
overlook  the  fact  that,  while  we  may  gradually  become  so,  we  are 
not  yet  in  normal  times  a  lending  nation.  We  still  need  large 
amounts  of  capital  for  our  own  purposes,  and  notwithstanding 
the  large  amount  of  our  securities  which  we  have  re-purchased 
during  the  past  fifteen  months,  a  very  considerable  amount  is 
still  held  abroad,  for  which  we  must  be  prepared  eventually  to 
make  payment,  either  by  re-purchasing  them,  or  by  meeting  them 
when  they  mature.  In  addition,  it  must  always  be  borne  in  mind 
that  our  investing  public  is  still,  in  large  measure,  timid  about  in- 
vesting money  in  foreign  countries,  and  prefers  domestic  securities 
to  such  an  extent  as  at  times  to  make  the  difference  of  return 
between  foreign  and  domestic  securities  of  similar  quality  offered 
in  our  markets,  seem  almost  absurd. 

Banker  and  Client 

The  banker  is,  of  course,  dependent  on  his  clients,  the  ulti- 
mate investors ;  and  while  he  can  do  much  by  a  proper  presenta- 
tion of  facts  to  educate  them,  in  the  final  instance  he  is  forced  to 
adopt  their  views  and  can  successfully  offer  and  place  only  se- 
curities which  meet  with  their  unqualified  approval.  Every  coun- 
try has  its  own  methods  of  doing  business,  and  ours  differ  in  some 
particulars  from  those  which  were  prevalent  in  London,  Paris  and 
Berlin  before  the  war.  Our  methods  of  distributing  and  handling 
securities  are  not  the  same  in  all  particulars  as  those  which  were 
in  use  in  European  countries,  and  this,  as  well  as  the  considerations 
already  stated,  must  be  borne  in  mind  in  determining  the  type  of 
security  to  be  offered  and  the  basis  on  which  it  is  to  be  placed. 
It  does  not  follow  from  this  that  our  methods  are  better,  but  they 
are  different,  and,  as  a  result,  a  security  which,  under  normal  con- 
ditions, might  find  a  ready  European  market,  might  be  very 
difficult  to  deal  with  here.  It  must  not  be  forgotten  that  Europe 
has  been  making  foreign  investments  for  generations,  while  with 
us  it  is  a  matter  of  comparatively  recent  development. 

Government  Finance 

To  take  up,  first,  the  matter  of  government  finance,  it  is  very 
important  that  the  investor  should  be  assured  that  the  borrowing 

308 


Foreign  Securities  and  the  American  Investor 

country  is  economically  administered;  that  in  its  annual  budget 
income  and  expenditure  balance;  and  that  the  proceeds  of  any 
loan  wanted  are  to  be  used  for  productive  purposes.  From  the 
point  of  view  of  the  investor  dreadnoughts  and  rifles  are  not  good 
security.  A  country  should  provide,  preferably  out  of  its  own 
budget,  through  taxation  of  its  own  people,  or  by  internal  loans 
provided  by  them,  for  all  that  might  be  called  non-productive  ex- 
penditures, and  it  should  restrict,  if  possible,  its  foreign  borrowing 
to  such  purposes — public  works,  railroads,  irrigation,  etc. — as  may 
be  self-supporting.  In  this  connection  the  policy  adopted  last  year 
by  our  own  great  City  of  New  York  may  be  of  interest.  On  Sep- 
tember 19,  1914,  the  Board  of  Estimate  and  Apportionment  of  the 
City  of  New  York  determined  that  the  cost  of  all  improvements  of 
the  revenue-producing  class,  such  as  rapid  transit,  docks,  railway 
and  water  terminals  and  water  supply,  should  be  defrayed  by 
the  issue  of  5O-year  corporate  stock  as  before,  but  that  the  cost  of 
all  permanent  improvements,  other  than  those  of  the  revenue-pro- 
ducing class,  thereafter  authorized  by  the  Board,  should  be 
financed  as  to  a  definite  and  decreasing  proportion  by  the  issue 
of  i5-year  corporate  stock,  either  serial  or  amortized,  and  the 
balance  through  the  medium  of  a  one-year  bond,  payable  from  the 
next  annual  budget.  This  policy  contemplates  the  financing  of 
improvements  authorized  during  the  year  1918,  and  subsequent 
years  through  the  inclusion  of  the  entire  cost  thereof  in  the 
annual  budget  of  the  city,  excepting  the  revenue-producing  in> 
provements  mentioned  above.  Attention  is  called  to  this  policy, 
which  was  adopted  by  the  municipal  authorities  of  New  York  City 
at  the  height  of  the  stress  and  strain  ensuing  upon  the  outbreak 
of  the  European  war,  and  which  even  under  these  trying  con- 
ditions was  found  entirely  satisfactory  by  bankers  and  investors, 
not  as  embodying  a  hard  and  fast  plan  to  be  followed  in  every  case, 
but  as  illustrating  the  general  principles  which  it  is  desirable  to 
adopt  in  government  and  municipal  financing  in  order  that  invest- 
ors may  have  the  greatest  sense  of  confidence  in  the  investments 
of  this  kind  they  are  invited  to  take. 

Desirable  Form  of  Foreign  Securities 

In  financing  productive  enterprises  in  foreign  countries,  the 
most  acceptable  form  of  security  is  probably  a  bond  having  a  direct 
lien  upon  the  enterprise  itself  and  guaranteed  by  indorsement  by 
the  government,  rather  than  a  direct  government  obligation. 

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Fifth  Session — Tuesday  Afternoon 


There  is  a  disinclination  on  the  part  of  some  governments  to 
pledge  specific  security,  but  by  so  doing  and  making  the  bonds 
to  be  issued  primarily  the  obligation  of  the  enterprise  for  whose 
purposes  the  proceeds  are  to  be  used,  the  best  results  as  a 
rule  can  be  accomplished  and  the  best  market  be  secured.  This  is, 
of  course,  based  on  the  proposition  that  governments  should  be 
administered  like  large  corporate  enterprises  in  a  business-like 
manner,  and  that  public  works  are  undertaken,  not  for  political 
purposes,  but  because  they  are  needed  by  the  country  and  will 
yield  a  proper  return. 

Where,  however,  it  is  not  feasible  to  issue  such  a  guaranteed 
obligation  and  consequently  a  direct  obligation  of  a  government 
is,  for  one  reason  or  another,  the  type  of  bond  selected,  a  defin- 
ite pledge,  for  the  service  of  the  loan,  of  all  or  a  portion  of  some 
definite  form  of  governmental  revenue  will  always  prove  of  ad- 
vantage. This  may  not  always  be  necessary,  but  with  countries 
still  in  course  of  development  and  dependent  on  foreign  financial 
assistance  the  investor  seems  to  feel  that  he  has  the  right  to 
expect  that  some  definite  security  be  given.  While  at  the  start 
it  may  be  necessary  to  do  this  in  order  to  open  markets  and  in- 
spire confidence,  if  in  the  course  of  time  the  record  of  the  bor- 
rower justifies  it,  the  normal  course  of  development  may  permit 
the  placing  of  loans  not  specifically  secured.  Our  public  has 
never  taken  kindly  to  debentures  or  other  unsecured  obligations 
and  has  become  accustomed  to  mortgage  security.  If,  therefore, 
it  is  desired  to  interest  the  American  public  in  foreign  securities, 
it  is  important  that  in  every  instance  in  which  it  is  practicable 
mortgage  security  should  be  given. 

Laws  in  Foreign  Lands 

From  this  it  follows  that  the  laws  in  the  foreign  countries, 
in  which  the  securities  are  domiciled,  must  be  such  as  to  give  full 
protection  to  the  foreign  lender,  so  that,  in  case  of  need,  he  can 
proceed  without  difficulty  to  foreclose  upon  the  property  on  which 
he  has  a  lien.  Any  difficulties  in  the  laws  in  this  respect  will 
militate  very  much  against  the  possibility  of  placing  such  securi- 
ties in  the  United  States.  Loans  to  be  placed  in  this  country 
should  also,  if  possible,  bear  a  definite  relation  to  trade  with  this 
country,  and  the  proceeds,  should  be  used  for  such  purposes  as 
will  best  further  this  trade.  Our  investors  will  give  a  much 
more  favorable  reception  to  a  loan  which  they  feel  stimulates  our 

310 


Foreign  Securities  and  the  American  Investor 

trade  than  to  one  issued  for  purely  internal  needs  of  the  borrow- 
ing nation. 

Assuming  that  the  general  principles  just  stated  are  fol- 
lowed, the  exact  form  of  the  obligation  proposed  to  be  offered 
to  investors  in  this  country  is  a  matter  which  must  be  dealt  with 
in  each  particular  instance,  and  no  general  rule  can  be  laid  down 
as  to  this,  since  it  depends  almost  exclusively  upon  conditions 
existing  at  the  time  of  the  negotiation  of  the  loan.  At  certain 
times  a  short-term  note  is  the  only  feasible  type ;  while,  at  others, 
a  long-time  or  a  serial  bond  can  be  sold  to  good  advantage.  As 
a  general  proposition,  however,  short-term  securities  should  be 
avoided,  if  it  is  at  all  practicable,  even  though  by  doing  so  the 
borrowing  government  is  obligated  to  what  may  seem  to  be  a 
high  rate  of  interest  for  a  longer  period  of  time.  If  financial 
conditions  should  change  and  money  be  procurable  at  materially 
lower  rates  advantage  can  be  taken  of  the  redemption  provision, 
which  should  be  embodied  in  every  long-time  bond.  As  a  matter 
of  fact,  however,  experience  has  shown  that,  generally  speak- 
ing, there  is  no  economy  in  short-time  borrowing — to  say  nothing 
of  the  danger  involved  for  the  borrower  in  running  up  a  consider- 
able debt  with  an  early  maturity.  For  the  same  reason  a  sink- 
ing fund  should  also  be  provided,  if  in  any  way  possible,  in  order 
to  reduce  the  amount  which  must  eventually  be  refinanced. 

Responsibility  of  Issuing  House 

It  is,  of  course,  of  the  greatest  importance  that  such  type  of 
security  be  selected  as  the  issuing  houses  can  unqualifiedly  recom- 
mend. On  the  other  hand,  the  issuing  houses  must  cooperate 
with  the  borrowing  nation  in  making  the  security  of  such  char- 
acter as  to  render  it  certain  that  the  latter  can  surely  and  punc- 
tually meet  the  engagements  it  undertakes.  A  security,  even  if 
successfully  issued,  whose  terms  are  too  onerous  upon  the  bor- 
rower is  not  the  proper  one  to  offer  to  our  public;  and  if,  as  a 
result  of  such  onerous  terms,  defaults  should  occur,  the  effect 
may  be  disastrous  upon  further  placing  of  loans  of  the  borrow- 
ing country  in  question,  and,  indeed  of  foreign  loans  in  general. 

Stability  of  the  Foreign  Government 

Then  there  is  the  broad  question  of  the  stability  and  perma- 
nency of  the  government  of  the  borrowing  country.  Unless  that 
is  assured  and  our  investing  public  feels  confident  that  it  will  be 

311 


Fifth  Session — Tuesday  Afternoon 


maintained,  it  is  hopeless  to  try  to  place  the  country's  securities 
in  the  United  States.  Small  loans  rarely  find  a  ready  market,  as 
the  investor  naturally  dislikes  purchasing  a  security  forming  part 
of  only  a  small  issue,  since  he  knows  that  in  case  he  desires  to 
sell  he  will  find  a  narrow  market,  if  one  at  all.  It  is,  therefore, 
probable  that  for  some  time  to  come  public  issues  of  foreign 
securities  in  this  country  must  be  restricted  to  the  larger  issues 
of  the  more  important  countries,  although  from  time  to  time 
smaller  amounts  may  possibly  be  dealt  with  in  the  form  of 
treasury  bills,  or  other  short-time  securities. 

Distinction,     Government  and  Corporate  Finance 

With  regard  to  corporate  finance,  as  distinct  from  government 
finance,  the  same  tests  must  be  applied  in  judging  the  adaptability 
and  availability  of  the  securities  of  corporations  for  placing  in 
this  country  as  if  they  had  to  do  with  the  domestic  enterprises  of 
the  United  States.  Latin-American  countries  have,  however,  one 
great  advantage  over  us,  and  that  is  their  system  of  definite  con- 
cessions to  private  business  enterprises  for  definite  periods  of 
time.  Their  Governments  have  thus  assumed  a  contractual  rela- 
tionship with  such  business  enterprises,  by  which  the  latter  have 
been  assured  of  undisturbed  possession  of  the  rights  granted  them ; 
and,  in  some  instances,  and  particularly  in  railway  enterprises,  of 
minimum  rates  of  compensation  and  of  freedom  from  competition. 
Corporate  enterprises  of  this  character,  properly  established  and 
successful  in  their  activities,  should  in  time  find  in  this  country 
a  market  for  their  securities.  Enterprises  in  course  of  construc- 
tion are  always  difficult  to  finance,  even  when  they  are  located  in 
our  own  country ;  and  this  would,  of  course,  be  even  more  true  of 
those  located  in  foreign  countries.  For  these,  government  aid  by 
way  of  guaranties  or  otherwise  would  probably  be  necessary  in 
order  to  make  their  securities  marketable  here. 

Danger  of  Misapprehension:     America  Versus  Europe 

In  conclusion,  it  should  again  be  emphasized  that  it  must  not 
be  assumed  because  a  number  of  foreign  loans  have  been  placed 
here  that  this  country  has  suddenly  become  a  world  market  for 
securities,  and  is  in  a  position  wholly  to  replace  the  European  mar- 
kets upon  which  these  countries  have  heretofore,  to  a  great  extent, 
been  dependent.  It  is  true  that,  owing  to  the  war  and  the  great — 
though  probably  temporary — abundance  of  money,  we  have  for 

312 


Foreign  Securities  and  ike  American  Investor 

the  time  being  become  the  only  open  financial  market  and  that,  as 
a  result,  it  has  been  possible  to  place  some  foreign  loans  here. 
This  has  been,  however,  to  a  considerable  extent  forced  placing, 
and  the  investor  has  had  to  be  tempted  by  high  rates  of  interest. 
This  has  held  true  of  European  as  well  as  of  South  American 
loans.  The  better  knowledge  of  the  entire  class  of  foreign  se- 
curities is,  however,  steadily  growing  in  the  United  States ;  and  we 
are  justified  in  the  expectation  that  in  time  we  can  build  up  a  real 
clientele  here  for  this  type  of  loans.  When  once  the  investor  is 
convinced  of  the  safety  of  many  forms  of  foreign  obligations  it 
should  become  feasible  to  place  such  loans  here  on  their  own 
merits,  and  on  a  basis  comparable  to  that  upon  which  our  own  se- 
curities of  similar  character  are  placed.  This  process  cannot  be 
artificially  hastened ;  but,  if  the  normal  development  is  allowed  to 
take  place,  without  too  much  pressure  being  brought  to  hurry  it, 
or  to  foster  it  on  hastily  devised  and  artificial  lines,  we  may  look 
forward  with  confidence  to  a  sound  growth  of  our  investment 
market  for  foreign,  and  in  particular,  for  South  American 
securities. 

Scrutinizing  Securities 

Great  care  must,  however,  be  taken  in  respect  to  the  quality 
of  the  securities  which  are  offered  to  American  investors.  Just  as 
the  credit  of  a  number  of  our  own  enterprises  has  been  seriously 
damaged  through  mistakes  of  management,  with  a  resultant  effect 
on  some  of  our  domestic  securities,  so  will  irreparable  damage  be 
done  to  the  possibility  of  financing  foreign  countries  here  if  mis- 
takes are  made.  It  takes  years  of  time  and  every  manner  of  pre- 
caution to  establish  confidence ;  but  it  may  be  destroyed  in  a  mo- 
ment. Investors  in  this  country  are  still  timid  as  to  foreign  invest- 
ments and  have  not  yet  fully  learned  how  to  discriminate.  They 
now  rely  to  a  great  extent  upon  their  confidence  in  the  judgment 
and  standing  of  the  issuing  houses  that  offer  these  investments. 
But  finally  the  public  itself  learns  to  differentiate  between  the 
good  and  the  bad,  and  it  is  only  by  a  record  of  solvency  and  proper 
administration  that  its  approval  and  interest  can  be  permanently 
secured. 


THE  CHAIRMAN  :  I  am  sure  we  have  all  been  greatly  pleased 
to  have  this  paper  presented  to  us  by  Mr.  Schiff. 

I  now  have  an  announcement  to  make :  The  Nicholas  Power 
Company,  through  Mr.  A.  J.  Lang,  export  manager,  who  is  a 

313 


Fifth  Session — Tuesday  Afternoon 


delegate  to  this  Conference,  announce  that  all  delegates  from 
foreign  countries  are  invited  to  visit  one  of  the  largest  motion 
picture  studios  on  Friday  of  this  week  as  their  guests. 

I  have  also  a  signed  statement  from  Mr.  Lang  saying  that 
they  have  arranged  with  the  executive  secretary  of  the  Motion 
Picture  Board  of  Trade  to  meet  the  foreign  delegates  at  the 
Hotel  Astor  at  9:30  A.M.,  Friday  morning,  the  loth  instant,  and 
take  them  to  the  motion  picture  studio.  The  Company  also  an- 
nounce that  they  are  willing  to  take  a  motion  picture  film  of 
all  the  delegates  on  the  steps  of  the  Hotel  Astor  tomorrow  morn- 
ing at  9 130. 

We  now  have  as  our  next  speaker  Mr.  J.  Santilhano,  of  the 
Guaranty  Trust  Company,  of  New  York. 

In  introducing  this  speaker  to  you  I  am  glad  to  bring  to 
your  attention  the  subject  of  his  paper,  which  is:  "Foreign  Se- 
curities and  their  Influence  on  American  Foreign  Trade." 

Mr.  Santilhano  has  had  wide  experience  in  marketing  se- 
curities in  Europe.  I  take  great  pleasure  in  introducing  to  you 
Mr.  Santilhano. 

Foreign    Securities   and    their    Influence  on 
American  Foreign  Trade 

By  J.  SANTILHANO, 

Of  the  Guaranty  Trust  Company,  N.  Y. 

It  is  impossible  to  lay  too  much  stress  on  the  necessity  of 
promoting  a  campaign  for  the  popularization  of  foreign  invest- 
ments throughout  the  United  States. 

Relation  Between  Our  Trade  and  Foreign  Investments 

Not  alone  will  the  growth  and  permanency  of  our  export 
business  depend  on  it  to  a  large  extent,  but  the  much  discussed 
prosperity  of  to-day  is  entirely  abnormal  and  due  to  specific 
causes.  The  large  inflow  of  gold  into  the  United  States  is  caused 
by  a  temporary  suspension  of  the  economic  laws  that  govern  con- 
ditions in  normal  times,  and  it  may  be  predicted  with  reasonable 
certainty  that  we  shall  be  called  upon  to  release  large  sums  of 
the  metal  after  the  war,  when  those  laws  become  again  operative. 
In  order  that  such  a  movement  shall  not  embarrass  us,  it  is  pri- 
marily necessary  that  banking  reserves  be  well  maintained  and 
banking  funds  kept  in  an  exceedingly  liquid  condition,  yet  it  is 
conceivable  that  with  the  continuous  inflow  of  gold  and  the  in- 
flated credit  basis  thereby  created  we  shall  lose  control  of  the 

314 


Foreign  Securities  and  American  Foreign  Trade 

situation  and  far-reaching  harm  overcome  us.  We  should  not 
lead  ourselves  to  believe  that  we  are  going  to  remain  entirely 
immune  from  the  ill  effects  of  the  European  War.  Modern  in- 
ternational credit  and  trade  relations  are  too  closely  interwoven 
for  us  to  expect  to  escape  the  shock  and  period  of  adjustments 
that  are  bound  to  follow  the  end  of  the  war.  The  abnormal  and 
favored  conditions  enabling  us  practically  to  dictate  our  will  to 
the  rest  of  the  world  in  the  sale  of  foodstuffs  and  manufactured 
articles  should  be  recognized  as  entirely  exceptional. 

Whether  we  are  going  to  succeed  in  maintaining  our  unique 
strategical  position  will  depend  on  the  efforts  of  our  merchants 
and  manufacturers  to  capture  foreign  markets,  the  desire  and 
ability  of  our  merchants  to  extend  legitimate  credits  to  foreign 
customers,  and  last,  but  not  least,  the  ability  and  willingness  of 
the  United  States  to  use  its  surplus  funds  in  the  development  of 
the  various  new  markets  captured. 

If  we  can  succeed  in  forcing  foreign  countries  to  become 
indebted  to  us  on  a  more  permanent  basis  and  not  merely  as 
the  result  of  a  temporary  trade  balance  we  shall  hold  in  our 
possession  the  most  powerful  and  sensitive  instrument  for  pro- 
tecting ourselves  against  sudden  changes  in  the  present  abnormal 
conditions.  At  the  same  time,  if  these  funds  are  prudently  in- 
vested, we  are  buying  with  them  a  prolonged  term  of  real  pros- 
perity for  our  industries.  The  ways  in  which  we  can  extract  a 
regular  tribute  from  other  nations  are  mainly  three-fold:  firstly, 
the  profits  on  our  foreign  trade,  secondly,  the  income  from  our 
investment  in  foreign  securities,  and  thirdly,  the  tolls  we  raise  in 
the  form  of  ocean  freights  by  American  steamers  from  other 
nations.  The  opportunities  in  the  latter  respect  are  somewhat 
obscure  owing  to  existing  laws  and  regulations,  but  there  are 
signs  even  in  that  direction  that  people  recognize  the  dangers  of 
experimenting  and  continuous  deviation  from  the  tried  and 
beaten  track. 

Does  it  not  seem  illogical  that  we  should  readily  invest  in 
Japanese  Government  bonds — as  we  have  done  more  particu- 
larly since  the  outbreak  of  the  European  War,  and  yet  allow 
our  own  Pacific  shipping  business  to  fall  entirely  into  the  hands 
of  Japan  ?  Analyzing  this  situation,  it  simply  means  that  we  are 
furnishing  Japan  with  money  at  a  low  rate  of  interest,  and  the 
Japanese  are  wisely  using  part  of  this  money  to  expand  their 
commerce  and  shipping,  the  United  States  merchants  and  manu- 
facturers paying  in  turn  a  very  much  heavier  rate  of  interest  in 

315 


Fifth  Session — Tuesday  Afternoon 


the  form  of  ocean-freights,  than  the  United  States  investor  is 
charging  Japan.  Can  we  blame  the  Japanese?  No,  certainly 
not !  It  is  good  business  on  their  part.  But  what  about  our  side 
of  the  transaction? 

Results  of  Foreign  Investments  in  the  United  States 

The  time  is  opportune  to  ask  one's  self  what  steps  should  be 
taken  and  avoided  to  promote  the  consolidation  of  our  financial 
supremacy  of  the  world.  In  this  connection  it  is  interesting  and 
instructive  to  review  the  history  of  our  own  country  in  this  re- 
spect from  the  middle  of  the  Victorian  Era  up  to  the  present 
time.  The  United  States  as  a  country  has  been  peopled  princi- 
pally by  immigration  from  the  various  European  countries.  After 
a  period  of  study  and  after  having  overcome  the  many  difficulties 
often  encountered  in  the  way  of  climate,  soil,  etc.,  these  immi- 
grants were  able  to  send  glowing  reports  to  their  folks  abroad  of 
the  unexampled  possibilities,  the  richness  of  the  soil  and  of  the 
tremendous  opportunities  for  the  investment  of  capital  in  this 
new  country.  In  some  cases,  these  friends  and  relatives  were  in- 
duced to  come  here  themselves,  bringing  with  them  the  whole  or 
part  of  their  financial  belongings.  In  other  cases  they  came  here 
on  their  own  accord  prompted  by  the  desire  to  see  and  study 
from  closer  range  all  that  had  been  reported  to  them.  These 
personal  visits  often  led  them  to  authorize  the  making  of  invest- 
ments in  lands  or  other  property.  Still  later,  the  bankers,  as 
financial  sponsors  for  these  European  countries,  came  personally 
in  order  to  investigate  conditions  on  the  ground.  They,  in  turn, 
became  so  thoroughly  convinced  of  the  values  which  were  offered 
to  them  that  they  used  their  influence  at  home  towards  the  draw- 
ing out  of  capital  to  be  used  in  the  development  of  the  many 
opportunities  scattered  throughout  the  vastness  of  the  United 
States.  It  was  they  who  marshalled  part  of  the  surplus  capital 
of  European  countries  for  railroad  construction  first,  for  the 
development  of  mining  enterprises,  the  upbuilding  of  industrial 
enterprises  and  the  financing  of  public  utility  properties  later. 
This  process  had  been  going  on  at  an  ever-increasing  rate  up  to 
shortly  prior  to  the  outbreak  of  the  European  War.  Needless 
to  say  not  all  European  capitalists  in  selecting  their  investments 
within  the  United  States  always  fared  equally  well,  but  reviewing 
these  investment  activities  for  a  long  period  of  years  we  arrive 
at  very  remarkable  results. 

316 


Foreign  Securities  and  American  Foreign  Trade 


SOME  AMERICAN  SECURITIES  LARGELY  BOUGHT  BY  EUROPEAN 
INVESTORS  A  GENERATION  AGO 

PRICE 
THEN 
RULING 

HIGH    LEVEL 
SINCE 
ATTAINED 
Not  to  speak 
of    valuable 
rights  re- 
ceived in 
some     cases 

Chicago  &  N  Western  Ry  Stock 

49 
87 
86 
86 
85 
80 
95 
91 
80 

108 
96 
100 
95 
95 
100 
97 
80 
93 

270 
132 
132 
130 
130 
193 
120 
118 
180 

135 
116 
180 
125 
125 
137 
112 
100 
117 

North  West.  Union  1st  7's  1917 

Winona  &  St.  Peter  1st  7's  1916 

Madison  Ext.  1st  7's  1915 

Menominee  Div.  1st  7's                     .    .    . 

Chicago,  Milwaukee  &  St.  Paul  Stock          

First  5's  1921  

Lake  Superior  Div.  1st  5's  1921  

Illinois  Central  Stock  

Montana  Central: 
St  Paul  Minn  &  Man  1st  6's  1937 

"                1st  4^'s  1937   . 

Pittsburg,  Fort  Wayne  &  Chic.Ry.pref.Stock  7%  guar 
South  Pacif  of  California  1st  6's                       ... 

"           Arizona  1st  6's               

St.  Paul  Minn  &  Man.  Cons.  6's  1933  

"                           4^'s  1933  

41                   Pacif.  Ext.  1st  4's  1940.  .  .  . 

Utah  &  Northern  (U.P.)  1st  5's  1926  

SOME  FOREIGN  SECURITIES  LARGELY  HELD  IN  EUROPE 

AVERAGE 
PRICE 
BEFORE  WAR 

PRICE 
TO-DAY 

British  Consols  2}/£%                                    

75 
90 
78 
85 
90 
67 
97 
90 
99 
84 
100 
102 
102^ 
99 
100 
106 
100 
70 
83 

57 
57 
50 
55 
60 
63 
77 

*85 
50 
83 
73 
87 
83 
83 
87 
58 
50 
50 

French  Rente  3%                                     .            

German  Reichs  Anl  3%                                .... 

Russian  4%  Govt.  &  Rrd.  Bds           .                 

Austrian  4%  Rente                       ...             

Netherlands  2J^%  Rente  

Danish  4%  Rente       

Swiss  3^%  Rrd.  Bds  

Christiania  4%  Bonds  p.  1952  

Unified  Turkish  4%  Bonds  

Unified  Egyptian  4%)  Bonds 

Brazil  5%>  Funded  Loan 

Argent  59o  Sterling  Loan 

Chile  5%  Govt  Bds 

San  Domingo  5%  Customs  Loan 

Peruvian  Corporation  6%  Deb 

Fed  Distr  Rio  de  Janeiro  5%  Bds 

Victor  Emanuel  3%  Ry  Bds                       .    ... 

Bagdad  Railroad  4%  Bds  guar                     

The  above  list  shows  that  American  investors  are  to-day  able  to  invest 
in  foreign  securities  on  terms  as  advantageous  as  those  on  which  European 
investors  bought  American  securities  a  generation  ago  and  with  probably  equal 
chances  of  appreciation  in  the  future. 

On  the  other  hand,  also,  very  serious  losses  have  been  suffered 
by  European  capitalists  on  their  investments  in  this  country; 
among  which  may  be  principally  pointed  out  the  Confederate 
bonds,  the  stock  of  the  Second  Bank  of  the  United  States,  the 
several  loans  to  the  States  of  Mississippi  and  Louisiana  and  a  few 

317 


Fifth  Session — Tuesday  Afternoon 


other  Southern  States,  not  to  speak  of  the  large  sums  lost  in  rail- 
road enterprises  and  numerous  projects  of  development.  Yet 
these  losses  count  for  very  little,  if  we  consider  the  aggregate 
figure  of  the  European  investments  in  this  country  and  keep  in 
mind  the  tremendous  appreciation  in  value  of  some  of  them. 
Moreover,  the  European  capitalist  has  learned  from  experience 
that  in  most  cases,  when  placing  his  funds  in  intrinsically  good 
propositions  in  young  countries,  he  has  in  the  end  come  out  well, 
even  if  he  had  to  go  through  receiverships,  with  the  unavoidable 
reorganizations,  involving  sometimes  heavy  assessments,  etc. 

RAILROAD  REORGANIZATIONS  IN  THE  UNITED  STATES. 


OLD  SECURITY 

SECURITIES  RECEIVED 

ASSESS- 
MENTS 

*HlGHVALUB 
OF  NEW 

SECURITIES 

Union  Pacific: 
Old  stock  $100 

UnionPacific: 
New  common  stock,  $100 

$15 

$219 

1st  6's  

$1000 

/  1st  Land  Grant  4's  $1000  \ 

1   "Pr-o-f     c+f\r*]r                                  ^ftO   I 

None 

1560 

Sinking  fund  8's. 

1000 

/  1st  Land  Grant  4's  $750  ) 
iPref  Stock                 1000  j 

None 

1780 

Phil.  &  Reading: 
Old  stock  

.$100 

Phil.  &  Reading: 
New  com.  stock  ....  $100 

20 

187 

Gen.  4's  

1000 

Gen.  4's  1000 

None 

1030 

First  Inc.  Bds  .  .  . 

Second  Inc.  Bds. 

Northern  Pacific: 
Old  stock  

1000 
1000 

.$100 

f  1st  pref  .  stock  300  \ 
I  2nd  pref.  stock  1000  / 
f  2nd  pref  .  stock  650) 
\  Common  stock  ....     550  j 
Northern  Pacific: 
New  com.  stock  ....  $100 

None 

None 

15 

1126 
1581 

300 

Pref  .  stock  

100 

J  Common  stock  ....       50  \ 

1  Pi-of    ct/-M->l-                                  ^O  I 

10 

205 

1st  mtge  6's 

1000 

Prior  lien  4's  .      .  .  1350 

None 

1431 

f  Prior  lien  4's           .  1185  \ 

2nd  mtge.  6's.  .  .  . 

1000 

IPref  stock                   500  J 

None 

1806 

/  Gen  lien  4's           .   1185  \ 

3rd  mtge  6's 

100C 

1600 

\  Pref.  stock  500  J 

*In  these  figures  no  account  has  been  taken  of  the  valuable  "rights"  that  have  in  several 
instances  accrued  to  the  holders  of  these  securities. 

In  the  case  of  the  United  States  the  situation  has  been  par- 
ticularly favorable  by  virtue  of  the  natural  wealth  of  the  soil, 
principally  as  regards  agriculture  and  minerals,  further  by  cli- 
matic conditions,  good  harbors,  etc.,  conducive  to  most  prolific 
crop-growing.  Yet  the  very  fact  of  the  vast  natural  resources  of 
this  country  and  other  qualities  which  conspired,  as  it  were,  to 
make  all  things  superabundant  and  comparatively  easily  obtain- 
able, has  been  the  cause  of  certain  disadvantages  and  evils.  It  has 
enabled  the  unscrupulous  to  manipulate  otherwise  sound  propo- 
sitions on  a  highly  inflated  basis,  frequently  to  the  harm  and  detri- 
ment of  those  financially  interested. 

318 


Foreign  Securities  and  American  Foreign  Trade 

Extravagance  Must  Make  Way  for  Thrift 

But  more  serious  has  been  the  growing  tendency  towards 
extravagance — extravagance  in  our  national,  our  corporate  and 
our  individual  life.  In  the  past,  the  disadvantages  of  this  state  of 
affairs  did  not  come  prominently  to  the  front.  The  general  public 
paid  the  bill,  but  instead  of  the  necessities  of  life  costing  less  in 
the  United  States  than  anywhere  else,  as  should  have  been  the 
case  in  view  of  our  unparalleled  natural  resources,  we  have  heard 
constant  complaints  of  the  high  cost  of  living.  Today,  however, 
the  future  position  of  the  United  States  among  the  world's  peoples 
is  at  stake.  We  can  afford  to  take  a  long  view  of  things  and  give 
the  preference  to  permanent  income  and  lasting  outlets  for  our 
manufactured  articles  over  quick  profits  as  heretofore.  We  are  de- 
sirous and  anxious  to  obtain  for  the  United  States  commercial 
supremacy  in  world  trade.  We  are  desirous  to  become  wholly  a 
creditor  nation.  It  should  be  fully  understood  from  the  very  be- 
ginning that  this  requires  more  than  trade  commissions,  banquets, 
self-laudatory  campaigns,  etc.  These,  in  themselves  good  as  an 
advertising  medium,  should  be  followed  by  disinterested  hard 
work  to  attain  the  maximum  benefit  for  the  community  at  large. 
We  have  to  set  about  and  teach  our  people  the  great  value  of 
thrift — thrift  in  their  private  life;  thrift  in  the  conduct  of  their 
business  and  that  of  their  Government.  Thrift  is  the  all-deter- 
mining factor  in  the  building  up  of  national  wealth.  Henceforth 
we  are  going  to  endeavor  to  compete  more  strenuously  than  ever 
before  with  the  older  nations  in  world  trade.  In  order  to  do  this 
successfully,  we  must  mobilize  all  our  forces,  material  and  other- 
wise, our  brains,  our  energies,  and  all  our  other  resources.  Let 
us  begin  and  inculcate  in  our  younger  generations  the  benefits  of 
saving;  let  us  impress  upon  their  minds  the  necessity  of  living 
within  one's  income,  and  let  us  stamp  out  for  good  the  mischievous 
idea  that  whenever  a  windfall  comes  our  way,  it  should  be  used 
as  a  basis  for  new  expenditure  of  a  permanent  character.  Through 
thrift  our  national  surplus  income  will  increase  very  rapidly,  and 
after  all,  it  is  only  this  surplus  margin  that  counts.  What  means 
the  possession  of  an  enormous  national  wealth  coupled  with  an 
enormous  annual  income,  if  we  live  fully  up  to  this  income  ?  Such 
a  policy  does  not  benefit  the  community,  nor  does  it  promote  the 
interests  of  the  country.  The  importance  of  such  a  campaign  can- 
not be  exaggerated,  and  I,  for  one,  hope  and  believe  that  the  com- 
mon sense  of  the  people  of  the  United  States  will  rise  to  the  occa- 
sion, and  subordinate  imaginary  personal,  local,  or  political  in- 

319 


Fifth  Session — Tuesday  Afternoon 


terests  and  prejudices  to  what  in  reality  is  a  national  question, 
and  therefore  beneficial  to  all. 

Prudent  Investments  in  Foreign  Countries  Stimulate  Trade 

In  order  to  derive  the  greatest  benefit  from  our  National 
wealth  we  must  invest  it  in  such  a  manner  as  to  obtain,  not  alone 
a  reasonable  return  on  the  money  invested,  but,  following  the  old 
maxim  that  "capital  follows  the  flag"  (the  commercial  flag,  at  any 
rate),  we  should  prudently  place  such  of  our  savings  as  we  do  not 
need  for  domestic  development  in  those  fields  where  our  trade 
and  commerce  expect  to  find  the  greatest  opportunities.  Is  it  not 
a  natural  sequence  that  countries  requiring  apparatus  for  agri- 
cultural and  irrigation  purposes ;  locomotives,  rails  and  trucks  for 
new  railroads;  cranes,  etc.  for  harbor  and  dock  work;  mining 
machinery,  etc.,  should  give  the  preference  to  those  countries  that 
are  willing  and  able  to  extend  the  necessary  financial  facilities  ? 

We  are  to-day  sufficiently  strong  to  commence  giving  such 
facilities,  but  we  lack  the  organization  necessary  to  place  the 
securities  resulting  from  such  foreign  investments  within  our 
own  boundaries.  In  short,  the  public  of  this  country  are  not  yet 
acquainted  with  the  merits  of  foreign  securities  as  a_  0  investment 
of  their  own  surplus  funds.  It  must  be  admitted  that  the  present 
time  is  an  exceedingly  difficult  one  to  bring  the  merits  of  such 
investment  home  to  them,  as  people  are  naturally  swayed  by  their 
sympathies  in  the  question  of  the  European  war,  and,  moreover, 
are  apt  to  become  unsettled  in  their  ideas  of  safety  by  exaggerated 
reports  of  passing  events.  Yet,  in  view  of  the  close  connection  of 
the  people  of  the  United  States  with  those  of  Europe,  and  their 
knowledge  of  the  customs  of  their  fathers  and  grandfathers,  it 
should  not  be  difficult  to  teach  them  and  popularize  this  class  of 
investment.  Suppose  we  were  to  submit  to  a  farming  com- 
munity in  Nebraska  a  certain  tract  of  land  in  the  Argentine,  well 
watered  and  within  reach  of  a  market  and  capable  of  producing 
a  good  yield  of  wheat,  linseed  or  corn,  and  that  this  land  were  ob- 
tainable at  a  very  low  price;  then  there  can  be  little  doubt  but 
that  this  farming  community,  understanding  the  conditions,  would 
be  very  much  interested  and  would  eventually  be  ready  to  invest 
money  therein.  Similarly,  in  the  case  of  a  good  lumber  proposi- 
tion, people  interested  in  that  business  would  be  found  to  have 
open  ears  for  anything  attractive  in  that  line.  The  same  may 
be  said  of  cattle-raising  and  various  industries.  But  all  these  are 
investments  that  essentially  interest  certain  communities  alone, 

320 


Foreign  Securities  and  American  Foreign  Trade 

and  it  would  not  be  a  wise  policy  to  open  up  our  career  as  inter- 
national bankers  with  this  class  of  investment,  because  it  would 
unavoidably  throw  open  the  door  to  all  sorts  of  illicit  schemes  to 
which  the  inexperienced  would  undoubtedly  succumb,  and  a 
deserving  movement  would  thereby  be  brought  to  an  untimely 
end. 

The  Merits  of  Government  Securities 

But  if  we  combine  all  these  productive  data,  the  land,  the 
forests,  the  mines  and  the  labor  of  the  people,  and  on  the  strength 
of  these  proven  assets  combined,  we  lend  our  money  to  the  legal 
government  of  such  countries,  we  get  a  better  security  than  we 
could  possibly  get  by  lending  against  any  one  part  thereof,  because 
such  a  security  is  backed  by  the  entire  assets  and  responsibility  of 
the  whole  nation,  and  furthermore  because  the  future  development 
of  their  country  and  the  reputation  of  its  people  will  depend  upon 
the  manner  in  which  they  fulfill  such  foreign  obligations.  Those 
of  our  bankers  that  negotiate  such  loans  can  use  their  power  and 
prestige  to  see  that  the  funds  are  used  in  a  manner  beneficial  to 
the  trade  of  the  United  States,  and  if  for  certain  reasons  it  is 
thought  desirable  to  exact  additional  material  guarantees,  there 
can  be  no  objection  to  doing  so. 

After  the  war  is  over  there  will  be  a  large  demand  for  capital 
in  Europe  and  elsewhere.  Since  the  outbreak  of  the  war  we  have 
opened  our  purses  wide,  urged  by  sentiment  and  charity,  to 
alleviate  such  suffering  as  we  were  able  in  the  various  countries 
concerned.  But  a  self-respecting  nation  is  too  proud  to  ask  for 
charity,  and  will  appreciate  to  a  far  greater  extent  if  we  will  utilize 
our  unique  financial  position  by  lending  to  it  our  funds  on  interest 
for  constructive  purposes.  This  will  mean  far  more  than  charity 
to  these  peoples,  and  at  the  same  time  we  shall  be  instrumental 
in  adding  to  our  domestic  prosperity  and  have  a  safe  investment 
for  our  funds. 

Bonds  of  Small  Denominations  Desirable 

In  order  to  make  such  foreign  securities  attractive  to  our  in- 
vestor, they  should  be  obtainable  in  small  denominations,  and  they 
should  be  issued  below  par  and  subject  to  quarterly  or  semi- 
annual drawings  at  or  above  par  so  as  to  stimulate  the  investment 
demand  by  the  reinvestment  of  drawn  bonds. 

All  Investing  Corporations  Should  be  Authorized  to  Purchase  Foreign 

Securities 

All  our  savings  banks,  our  insurance  companies,  and  other 
financial  institutions,  should,  if  they  so  wish,  be  permitted  to  in- 

321 


Fifth  Session — Tuesday  Afternoon 


vest  a  certain  percentage  of  their  resources  in  foreign  bonds  of 
unquestionable  worth.  There  is  no  reason  to  assume  that  those 
charged  with  the  investment  of  these  funds  would  act  in  a  less 
conservative  manner  if  this  privilege  were  granted  them.  The  ad- 
vantage of  such  a  course  becomes  evident  if  we  place  ourselves 
in  the  situation  that  arises  in  times  of  internal  stress.  Imagine  a 
run  on  some  of  our  large  investing  corporations.  Securities  would 
be  thrown  on  the  market  in  order  to  obtain  cash  funds,  and  in 
existing  circumstances  the  whole  burden  would  fall  on  the  New 
York  financial  district,  and  probably  the  sixty  days  clause  would 
have  to  be  resorted  to.  Had  these  institutions  possessed  large 
holdings  of  foreign  securities,  these  could  be  sold  abroad,  thereby 
relieving  the  strain  on  the  institution,  and  instead  of  placing  a 
burden  on  the  money  center  of  the  country,  such  action  would 
tend  to  strengthen  the  financial  position  there.  Even  our  Postal 
Savings  banks  might  well  give  the  example  in  this  direction,  and 
it  may  be  assumed  that  if  once  the  savings  banks  make  invest- 
ments of  this  nature,  the  general  public  will  soon  follow  suit.  At 
present  it  seems  almost  unreasonable  to  demand  from  the  indi- 
vidual something  that  the  institution  is  legally  restrained  from 
doing. 

It  is  not  my  object  to  go  into  detail  as  to  the  various  kinds 
of  foreign  investments  since  a  greater  authority  has  consented 
to  discuss  that  subject  before  this  Conference.  However,  as  far 
as  government  securities  are  concerned,  the  record  is  a  very 
clean  one,  with  the  exception  of  those  of  the  South  and  Central 
American  republics.  European  experience  there  has  been  un- 
fortunate as  a  result  of  the  many  upheavals  in  domestic  politics 
in  those  countries,  and  particularly  on  account  of  the  lack  of 
diversity  in  the  products  of  some  of  these  lands,  making  their 
credit  structure  very  susceptible  to  good  or  bad  crop  influences. 
Thanks  to  the  pioneer  work  of  European  capital  and  the  bringing 
about  of  improved  communications  with  the  interior  these  dan- 
gers, though  not  entirely  eliminated,  have  been  very  much  les- 
sened. 

The  Distribution  of  Foreign  Securities 

As  regards  the  distribution  of  foreign  securities,  little  more 
need  be  said  about  this.  Our  banks  cannot  and  may  not  lock  up 
funds  in  long  term  commitments  of  this  nature.  Their  primary 
duty  is  to  finance  the  requirements  of  our  importers  and  ex- 
porters and  other  self-liquidating  transactions.  But  in  order  to 
make  our  national  holdings  of  foreign  securities  effective  the 

322 


Foreign  Securities  and  American  Foreign  Trade 

public  generally  and  the  guardians  of  the  public's  savings — the 
savings  banks — must  be  brought  to  see  the  necessity  and  ad- 
vantages of  permitting  funds  to  be  used  for  this  purpose. 

Government  Securities  and  the  Immigrant 

We  have  heard  many  complaints  of  the  large  sums  sent 
abroad  by  our  immigrant  population.  In  part,  this  is  due  to  the 
fact  that  these  people  arriving  in  a  strange  country  did  not  find 
the  same  financial  apparatus  as  that  to  which  they  were  ac- 
customed at  home.  They  knew  little  of  our  private  institutions, 
and  had  heard  of  big  losses  suffered  through  the  bankruptcy  of 
private  bankers,  mostly  all  of  them  of  their  own  kin.  United 
States  Government  bonds  were  not  obtainable  in  small  denomina- 
tions and  sold  at  prohibitive  prices  as  a  result  of  our  former 
inelastic  currency  system.  Consequently,  these  people  preferred 
to  send  home  their  funds  to  trusted  friends  and  organizations. 
Our  Postal  Savings  system  has  brought  considerable  improve- 
ment in  this  direction,  but  there  is  every  reason  to  suppose  that 
if  foreign  government  securities  were  obtainable  in  small  denom- 
inations they  would  be  purchased  by  the  very  class  that  has  up  to 
now  been  steadily  sending  its  funds  abroad. 

The  Benefits  of  Foreign  Investments 

Summing  up  the  benefits  of  foreign  investments  we  may 
mention — 

1.  Their  immunity  from  domestic  disturbances. 

2.  Their  broad  international  market  and  consequent  narrow 
fluctuations  in  normal  times. 

3.  The  fact  that  at  present,  thanks  to  very  exceptional  con- 
ditions, they  are  obtainable  on  exceedingly  attractive  terms. 

4.  The  benefits  bestowed  upon  our  home  industries  involv- 
ing the  employment  of  labor  in  standard  industries. 

5.  The  desirability  of  geographical  distribution  of  invest- 
ments as  a  common-sense  business  proposition. 

As  regards  their  safety,  this  is  a  point  on  which  it  is  impos- 
sible to  generalize,  and  each  security  offered  must  be  judged  on 
its  own  merits,  just  as  in  the  domestic  field,  but  undoubtedly  they 
will  stand  the  test  of  reasonable  comparison,  and  therefore  do  not 
let  us  demand  more  than  we  have  been  and  would  be  willing  to 
give  under  similar  conditions.  One  of  the  causes  of  the  collapse 
of  the  supremacy  of  Holland's  trade  in  the  seventeenth  century 
is  well  summed  up  in  the  old  rhyme: 

323 


Fifth  Session — Tuesday  Afternoon 


"In  matters  of  commerce  the  fault  of  the  Dutch, 
Is  giving  too  little  and  asking  too  much." 
Do  not  let  us  make  the  same  mistake.  We  have  an  oppor- 
tunity such  as  no  nation  has  ever  had,  but  trade  conquests  are 
not  made  in  a  day  and,  moreover,  foreign  commerce  and  foreign 
business  generally  are  comparatively  strange  to  us.  It  will  re- 
quire careful  study  and  cooperation  to  establish  our  position. 
Our  banks  and  trust  companies  are  doing  all  in  their  power 
to  facilitate  and  finance  business  with  foreign  parts;  our  manu- 
facturers, merchants  and  investors  should  remember  that  a  for- 
eign customer  is  entitled  to  the  same  credit  as  his  domestic  equal, 
and  if  we  insist  on  demanding  our  full  pound  of  flesh,  as  we  are 
able  to  do  to-day,  we  not  only  may  give  just  cause  for  resent- 
ment but  we  run  the  risk  of  losing  all  and  more  than  we  have 
gained.  To  avoid  this,  it  cannot  be  urged  too  strongly  on  every- 
body—manufacturers, investing-corporations,  insurance  companies, 
etc.,  to  acquire  high-minded  men  acquainted  with  foreign  methods 
and,  above  all,  the  psychology  of  foreign  peoples,  so  that  we  may 
adjust  ourselves  to  such  demands  as  are  reasonable  and  com- 
patible with  conservative  business.* 


THE  CHAIRMAN  :  Gentlemen,  I  think  in  the  main  that  we  have 
had  two  very  excellent  papers  presented  to  close  our  afternoon's 
work,  and  an  opportunity  is  now  open  for  any  remarks  that  you 
may  desire  to  make,  or  any  questions  you  may  desire  to  ask, 
that  cover  the  grasp  of  these  two  papers. 

Has  anyone  anything  to  present? 

MR.  PEPPER  (of  Chicago)  :  We  have  frequently  heard  it  as- 
serted that  after  the  war  is  over  the  important  belligerent  coun- 
tries are  going  to  try  to  regain  their  old  position  in  the  way  of 
financing  trade  that  they  had  before. 

As  I  understand  statistics  Argentina  alone  has  been  receiving 
about  $100,000,000  from  England  every  year;  from  France,  every 
year,  about  half  that  amount;  and  about  $50,000,000  from 
Germany. 

Of  the  other  countries  Brazil  has  been  receiving  a  smaller 
amount,  and  the  other  countries  a  smaller  amount  still  in  propor- 
tion, which,  altogether,  would  amount  to  about  a  billion  dollars. 

*Since  writing  the  above,  the  newspapers  have  announced  the  organization  of  the 
American  International  Corporation,  which  is  undoubtedly  the  first  step  in  a  broader  sense 
towards  real  constructive  work  in  the  foreign  investment  field.  The  creation  of  manager- 
shares  would  also  seem  to  indicate  a  turning  point  in  our  methods  of  financing  as  demonstra- 
ting that  those  interested  are  not  prompted  by  the  desire  for  quick  gain  but  view  the  future 
with  sufficient  confidence  to  prefer  a  permanent  income. — J.  5. 

324 


Discussion  on  Foreign  Investments 


In  view  of  this  present  war  those  countries  were  placed  in  a 
very  precarious  position,  and  the  question  is  whether  this  country 
could  afford  to  grant  temporary  relief  to  them  with  the  present 
situation  in  Europe. 

We  are  compelled  by  conditions  to  help  the  European  coun- 
tries, because,  if  we  do  not,  they  would  be  able  to  turn  over  our 
securities  upon  us  and  force  us  to  do  it. 

The  question  is  whether  it  would  be  safe  for  us,  if  we  can,  to 
help  those  Latin-American  countries  and  other  neutral  countries 
to  the  extent  of  giving  them,  perhaps,  a  small  amount  in  handy 
form ;  and  whether  we  can  do  it  with  safety. 

As  I  understand,  the  Federal  Reserve  law  that  went  into 
effect  recently  enables  us  to  conserve  our  gold  and  add  to  it 
about  $400,000,000,  which,  according  to  the  Secretary  of  the 
Treasury  and  those  at  the  time  the  law  went  into  effect,  would 
enable  us  to  expand  our  resources,  our  credit,  to  the  extent  of 
about  one  billion  dollars;  and  we  have  been  lending  money  to 
those  countries  in  view  of  that  Federal  Reserve  law. 

The  question  is :  Can  we  safely  extend  $750,000,000  to  those 
neutral  countries  and  be  able  to  rearrange  matters  after  the  war  ? 

As  Mr.  Warburg,  one  member  of  the  firm  of  Kuhn,  Loeb  & 
Company,  has  been  and  is  one  of  the  main  heads  of  the  Federal 
Reserve  Bank,  and  no  doubt  Mr.  Schiff  has  had  occasion  to 
study  the  matter  more  thoroughly  than  I  have,  I  would  like  to 
ask  him  whether  he  thinks  we  could  safely  go  to  that  extent 
without  imperiling  our  position  with  European  countries. 

We  have  not  done  very  much  so  far.  We  have  only  lent 
to  Latin-American  countries,  at  the  utmost,  $50,000,000  to 
$75,000,000,  whereas  they  were  accustomed  to  credit  from  other 
countries  of  about  $750,000,000.  Can  we  not  temporarily  give 
them  that  relief  ?  It  would  only  be  a  matter  of  temporary  relief, 
because,  after  the  war  is  over,  we  would  have  to  meet  the  French, 
the  English  and  other  competition,  and  we  would  have  to  stand 
on  our  own  ground. 

These  other  countries  in  Europe  are  facing  the  question  of 
building  up  their  own  natural  resources  as  the  result  of  the  de- 
struction of  property  through  the  war.  They,  no  doubt,  could 
not  give  that  relief.  The  question  is :  Could  we,  right  now,  tem- 
porarily give  them  that  relief? 

MR.  SCHIFF  :  I  do  not  know  whether  I  quite  follow  the  gen- 
tleman's question.  I  would  like  to  state,  incidentally  and  paren- 
thetically, that  Mr.  Warburg  is  not  a  partner  of  Kuhn,  Loeb  & 

325 


Fifth  Session — Tuesday  Afternoon 


Company.  I  am  sorry  to  say  he  no  longer  is,  and  I  have  not 
as  much  opportunity  as  I  would  like  to  see  Mr.  Warburg,  as  he 
is  in  Washington  and  I  am  in  New  York.  Therefore,  I  do  not 
get  much  of  an  opportunity  to  discuss  these  questions  with  him. 
If  I  did  I  would  probably  not  feel  at  liberty  to  repeat  what  he 
had  said  to  me  without  his  permission.  So  I  wish  it  clearly 
understood  that  anything  I  may  say  is  my  own  personal  expres- 
sion, and  not,  by  indirection  even,  coming  from  or  having  any- 
thing to  do  with  any  member  of  the  Federal  Reserve  Board. 

I  do  not  know  that  I  quite  follow  Mr.  Pepper's  question,  as 
I  do  not  see  just  what  bearing  the  Federal  Reserve  Board  situa- 
tion has  on  the  matter. 

As  I  understand  the  Federal  Reserve  law,  the  Federal  Re- 
serve banks  are  authorized  to  rediscount  for  member  banks  ac- 
ceptances based  on  import  or  export  transactions.  These,  in  turn, 
can,  when  so  discounted,  form  a  basis  for  currency. 

There  is  practically,  therefore,  no  limit  prescribed,  I  might 
almost  say,  within  reason,  of  course,  to  the  amount  of  money 
which  can  be  provided  for  transactions  based  on  import  or  export. 

On  the  other  hand,  the  Federal  Reserve  Board  as  I  know  it, 
or,  rather,  the  Federal  Reserve  banks,  have  no  facilities  for 
granting  credits. 

A  transaction  based  on  the  import  or  export  of  a  certain 
commodity  is  a  totally  different  proposition  from  giving  credit  to 
a  nation.  As  a  matter  of  fact,  none  of  the  credits  granted  to 
countries  during  the  last  few  months — and  if  I  am  wrong,  I  ask 
to  be  corrected  by  those  present  who  have  had  more  to  do  with 
that  than  I  have — have  been  eligible  for  Federal  Reserve  dis- 
count. 

For  instance,  the  Russian  credits,  the  bills  drawn  here  for 
Russia,  which  were  renewed  several  times,  are  not  available  for 
Federal  Reserve  discount. 

So  that  you  must  differentiate  between  credit  and  export  and 
import  transactions. 

Whether  this  country  could  make  available  for  the  countries 
of  South  America  the  sum  of  $500,000,000  or  $750,000,000  or  a 
billion  dollars  is,  I  should  say,  dependent  on  the  security  which 
South  America  can  offer  and  the  readiness,  primarily,  of  our 
financial  institutions;  and,  in  the  second  instance,  of  our  in- 
vestors, to  provide  it. 

MR.  FLEMING:  I  would  like  to  ask  Mr.  Schiff  a  question, 
Mr.  Chairman,  if  I  may. 

326 


Discussion  on  Foreign  Investments 


THE  CHAIRMAN:  Certainly. 

MR.  FLEMING  :  You  referred,  Mr.  Schiff,  to  the  possibilities 
of  expansion  of  credits  through  the  discount  of  paper  under  the 
Federal  Reserve  law,  and  you  mentioned  that  that  expansion 
would,  possibly,  be  almost  without  limit.  All  of  these  notes  issued 
by  the  Federal  Government  based  on  those  discounts  are  redeem- 
able in  gold  at  the  treasury,  are  they  not?  And  would  not  the 
amount  of  gold  in  the  treasury  necessarily  act  automatically  as  a 
limit  upon  that  extension? 

MR.  SCHIFF:  I  do  not  think  it  would,  necessarily;  although, 
as  a  matter  of  fact,  the  limit  is,  as  I  think  you  gentlemen  probably 
remember,  that  the  national  bank  member  of  the  Federal  Reserve 
system  is  only  permitted  to  accept  in  a  certain  proportion  to  its 
capital  and  surplus — I  believe  it  is  one-half — is  that  right? 

MR.  GOODHUE  (Vice-president  First  National  Bank,  Boston, 
Mass.) :  Under  the  Federal  Reserve  law  a  member  of  the  Federal 
Reserve  system  can  accept  drafts  drawn  upon  it  to  facilitate  the 
exportation  or  importation  of  merchandise  up  to  50  per  cent, 
of  its  capital  and  surplus,  except  that  upon  special  permission  of 
the  Federal  Reserve  Board  they  may  be  permitted  to  accept  up 
to  100  per  cent,  of  their  capital  and  surplus. 

MR.  SCHIFF:  That  is  limited  by  the  law  in  that  way.  So 
that,  assuming  that  our  national  banks  had  gone  to  the  prescribed 
proportion  of  their  capital  and  surplus,  and  had  used  the  privilege 
granted  under  the  Federal  Reserve  law  to  its  full  possibilities,  that 
would  be  the  limit. 

I  do  not  think  the  limit  of  gold  in  the  treasury,  or  gold  in  the 
Federal  Reserve  banks  is  as  real  as  it  is  apparent,  perhaps,  for  the 
reason  that  experience  has  shown  that  as  long  as  the  Government 
is  good,  people  do  not  present  the  bank  notes  or  the  currency  of 
the  government  for  redemption. 

In  European  countries,  outside  of  England,  that  before  the 
war  had  Bank  of  England  notes  fully  covered  by  gold — take 
France  or  Germany,  where  they  had  only  a  certain  percentage 
of  gold  to  the  account  of  those  outstanding  notes,  there  never 
arose  an  occasion  when  the  gold  reserve  was  in  danger. 

Of  course  it  is  theoretically  true  that  if  you  collected,  or 
could  collect,  all  the  outstanding  notes  of  the  Bank  of  France 
they  would  be  on  a  silver  basis,  because  they  have  the  right  to. 
If  you  collected  all  the  outstanding  notes  of  the  Reichsbank,  they 
could  not  pay  in  gold,  even  before  the  war;  but  that  is  inherent 
in  their  currency  system,  based  on  the  commercial — 

327 


Fifth  Session — Tuesday  Afternoon 


MR.  FLEMING:  But  if  you  were  a  member  of  the  Federal 
Reserve  bank — 

MR.  SCHIFF  :  But  I  am  not. 

MR.  FLEMING  (continuing)  and  came  to  this  question  of 
expansion,  and  had  discretion  as  to  whether  you  would  expand 
or  not,  you  would  have  an  eye  on  the  gold  reserve,  would  you  not  ? 

MR.  SCHIFF:  I  would  not  venture  an  opinion  as  to  what  I 
would  do  if  I  were  a  member  of  the  Federal  Reserve  Board. 

MR.  IVERSON  :  Mr.  Chairman,  I  would  like  to  say  a  word  in 
answer  to  the  gentleman  from  Chicago. 

THE  CHAIRMAN  :  Certainly. 

MR.  IVERSON  :  Answering  the  gentleman  from  Chicago  as  to 
how  this  country  would  stand — notwithstanding  the  argument 
of  our  friend  from  Kuhn,  Loeb  &  Company  and  my  distinguished 
friend  over  here — I  want  to  say  that  what  has  preserved  this 
country  during  this  present  condition  are  two  things :  The  Ameri- 
can Government  has  two  great  friends  that  will  enable  it  at  this 
time  to  carry  out  and  further  any  obligation  it  may  make.  Those 
two  friends  have  been  created  by  the  Infinite.  They  are  the  At- 
lantic and  the  Pacific  Oceans;  and  the  obligations  this  country 
may  assume  can  be  carried  out  with  the  assistance  of  these  two 
God-given  friends. 

The  insults  hurled  at  this  country  during  the  past  year  are 
similar  to  those  that  caused  the  war  of  1812;  but  with  the  assist- 
ance of  the  two  great  bodies  of  water,  and  the  present  governing 
political  strategy,  the  American  Government  will  be  able  to  meet 
any  problem  or  obligation  which  may  be  presented. 

I  do  not  think  our  good  friend  from  Chicago,  under  these 
conditions,  need  have  any  fear  for  this  country.  With  the  great 
influx  of  money  that  is  coming  to  us  at  present,  we  shall  be  able 
to  meet  any  conditions  which  may  be  presented. 

THE  CHAIRMAN:  Are  there  any  further  remarks?  If  not,  I 
have  an  announcement  to  make,  and  that  is:  Will  the  members 
of  the  Committee  on  Recommendations  meet,  in  the  room  as- 
signed to  them,  at  the  close  of  this  Conference?  That  is  asked 
for  by  Captain  White,  the  chairman  of  the  committee. 

Gentlemen,  it  is  getting  late;  we  have  practically  concluded 
the  business  of  the  day,  and  it  is  now  up  to  you  to  get  ready  for 
the  business  of  the  evening. 

(Whereupon,  at  5:20  P.M.,  a  recess  was  taken  until  Wednes- 
day, December  8,  at  9:45  A.M.) 


328 


The  Banquet — Tuesday  Evening 


THE  BANQUET 

Tuesday  Evening,  December  7,  1915 

PRESIDENT  GEORGE  POPE:  To  the  ladies,  our  distinguished 
guests,  to  our  delegates  from  abroad  as  well  as  from  home,  and 
to  the  gentlemen  of  the  Association,  the  National  Association 
of  Manufacturers  bids  you  again  a  hearty  welcome  to  this  play- 
ground of  this  Conference.  It  is  certainly  to  us  a  remarkable 
gathering  of  men  of  affairs.  The  Association  appreciates  in  a 
great  degree  the  visits  to  this  Conference  of  the  delegates  from 
lands  across  the  sea;  and  appreciates  that  if  it  were  not  of  im- 
portance they  would  not  certainly  have  traveled  thousands  of 
miles,  which  they  have,  to  attend  it.  And  in  the  past  two  days 
we  of  this  republic  have  highly  appreciated  the  valuable  papers 
which  have  been  read  and  the  information  which  has  been  given 
to  us  of  the  commerce  in  other  countries,  and  we  hope  that  those 
gentlemen  will  also  appreciate,  and  will  get  benefit  and  informa- 
tion from,  that  which  has  been  read  and  spoken  to  them  from 
our  own  people  here.  Certainly  it  brings  about,  or  should  bring 
about,  a  new  era  in  commerce,  a  gathering  like  this  of  men  en- 
gaged in  transportation,  in  banking  and  in  commerce  for  so  many 
days  exchanging  information  and  views  on  these  important  mat- 
ters, and  it  must,  I  believe,  in  the  end  bring  great  benefit  and 
give  impetus  to  commerce  between  the  countries  represented. 
And  I  beg  you  to  believe,  gentlemen,  that  the  National  Associa- 
tion of  Manufacturers  has  not  taken  this  initiative  merely  for 
itself,  and  while  naturally  it  expects  that  its  members  may  derive 
and  will  derive  benefit  from  it  its  one  aim  is  to  give  service, 
service  not  only  to  its  members  but  to  all  in  the  community  and 
in  the  communities  abroad. 

I  wish  to  read  to  you  a  telegram  received  just  before  we 
came  into  the  dining  room,  addressed  to  the  Chairman  of  the 
Committee  of  Arrangements  of  the  Conference : 

I  regret  exceedingly,  owing  to  a  committee  meeting  this  afternoon 
which  has  not  adjourned  in  time,  I  will  not  be  able  to  attend  your  banquet 
tonight,  but  I  wish  to  express,  on  behalf  of  the  Pan-American  Union 
at  this  hour  when  Panama  Canal  is  so  much  at  the  front,  and  has  been 
especially  emphasized  by  the  President  in  his  message  today,  our  intense 
satisfaction  that  an  organization  like  yours  is  giving  due  attention  to  the 
mighty  field  of  Latin  America.  May  I  also  take  advantage  of  this  op- 
portunity to  congratulate  you  on  having  as  your  speakers  tonight  two 
such  distinguished  and  worthy  representatives  of  the  Pan-American  Un- 
ion as  the  Ambassador  of  Brazil  and  the  Minister  of  Peru. 

(Signed)     JOHN  BARRETT,  Director  General  Pan-American  Union. 
(Applause.) 

329 


The  Banquet — Tuesday  Evening 


Gentlemen,  I  am  now  going  to  pass  all  my  burdens  over  to 
the  toastmaster  of  the  evening.  It  is  a  comparatively  modern 
invention  and  one  which  I  always  like  to  take  advantage  of. 

I  have  the  honor  to  introduce  to  you,  as  toastmaster  of  the 
evening,  Mr.  James  A.  Emery,  of  Washington,  Counsel  for  the 
National  Association  of  Manufacturers.  Gentlemen,  Mr.  Emery. 
(Applause.) 

THE  TOASTMASTER  :  Mr.  President,  Ladies  and  Gentlemen :  I 
assume  that  in  a  gathering  like  this  there  might  be  great  wonder 
that  a  lawyer  is  asked  to  assume  the  responsibilities  of  an  oc- 
casion of  this  character.  I  presume  it  will  not  be  the  first  time 
that  a  manufacturer  has  found  refuge  in  his  counsel,  nor  will 
it  be  the  first  time  that  counsel  has  found  refuge  among  manu- 
facturers. But  the  courage  of  lawyers  has  never  been  questioned. 
They  are  known  to  be  able  to  face  any  charge  with  unflinching 
determination. 

And  it  seems  to  me  that,  in  the  midst  of  the  industrial  day 
in  which  we  live,  the  lawyer  has  been  quite  as  essential  to  the 
manufacturer,  to  the  merchant,  and  to  the  banker,  as  even  that 
most  ancient  institution,  the  bookkeeper.  For  surely  without  his 
aid  you  would  not  have  wandered  free  and  careless  of  demeanor 
as  you  sit  here  tonight  in  the  maze  of  interrogation  points,  in 
the  forest  of  uncertainties  to  which  your  commercial  feet  have 
found  their  way,  in  the  midst  of  business  legislation  that  has 
been  sometimes  uncertain  and  ambiguous  all  the  way  from  the 
courts  of  original  error  to  those  of  ultimate  conjecture.  (Ap- 
plause and  laughter.)  But,  perhaps,  sirs,  a  lawyer  may  be  ex- 
cused for  taking  asylum  among  you.  If  I  were  to  explain  the 
sanctuary  which  I  seek,  I  should  probably  find  some  precedent 
for  it  in  the  tale  of  one  of  my  old  professors,  who  told  me  of 
an  Irishman  on  his  deathbed;  who,  having  received  the  sacrament 
and  made  his  peace,  leaned  over  to  his  confessor  and  said: 
"Father,  I  have  one  last  request  to  make."  "And  what  is  it, 
Patrick?'*  "Sure,"  he  says,  "when  I  die,  Father,  will  you  be  good 
enough  to  bury  me  in  a  colored  cemetery?"  "And,  Patrick,  why 
should  that  be,  sir?  Why  should  you  go  there?"  "Sure, 
Father,"  he  says,  "that  is  the  last  place  they  would  look  for  an 
Irishman."  (Laughter.) 

So,  possibly,  among  the  men  of  trade  is  the  last  place  they 
expect  to  find  a  lawyer. 

I  was  carefully  informed  by  kindly  friends  that  the  chief 
purpose  of  a  toastmaster  is  to  introduce  others  and  keep  silent 

330 


Address  of  the  Toastmaster 


himself,  and  I  was  informed  as  I  came  that  Mr.  Sidney  Smith, 
who  was  termed  the  best  toastmaster  of  his  time,  always  said 
there  were  but  two  things  for  men  who  occupied  the  irresponsible 
position  thrust  upon  me  this  evening  to  do  on  an  occasion  like 
this ;  one  was  to  present  himself  with  a  pun,  the  other  to  excuse 
himself  with  a  story.  I  feel  that  to  the  after-dinner  audience  of 
New  York  one  dares  not  tell  stories.  They  have  heard  so 
many  which  have  been  brought  from  other  cities  where  they  were 
new  (laughter)  that  a  New  York  audience  meets  with  consider- 
able criticism  the  importations  that  have  been  enjoyed  elsewhere. 
In  fact,  one  feels  that  you  might  have  that  fellow-feeling  of 
sympathy,  perhaps  of  condescension,  that  I  remember  was  once 
expressed  by  a  man  whom  I  regarded  as  one  of  the  most  inter- 
esting, as,  had  he  lived,  he  would  have  been  one  of  the  most 
noted,  of  the  public  men  of  this  country,  Francis  Cushman,  of 
Washington,  whose  untimely  death  deprived  the  Congress  of 
the  United  States  of  one  of  its  shrewdest  minds.  He  came  a 
stranger  to  it,  a  tall,  gangling  figure,  so  homely  that  he  said  of 
himself  one  thing  at  least  had  never  been  remarked  of  him: 
"he  was  not  two-faced,  because  men  knew  if  he  had  another 
he  would  have  used  it."  (Laughter.)  At  that  time  a  distinguished 
son  of  Minnesota,  Adam  Bede,  was  a  wit  and  humorist  of  the 
house,  and  Cushman  on  his  maiden  appearance  attracted  very 
considerable  attention  by  an  exceedingly  clever  speech  upon  the 
tariff;  and  when  he  was  to  appear  the  second  time  the  dis- 
tinguished son  of  Minnesota,  no  doubt  anticipating  the  waning 
of  his  own  star,  having  attracted  the  Speaker's  eye,  delivered 
himself  of  one  of  his  characteristic  speeches,  full  of  humor,  full 
of  things  that  cultivate  the  mind  and  stick  in  the  memory,  and 
when  he  had  concluded  the  tall,  lean  son  of  Washington  unwound 
his  angular  frame  from  its  seat,  and,  lifting  up  his  head  that 
moved  like  an  cornstalk  in  the  wind,  he  said : 

"Mr.  Speaker,  I  have  listened  not  only  with  great  interest 
to  the  exceedingly  informing  remarks  of  the  gentleman  from 
Minnesota,  I  have  been  entertained  as  you  have,  I  have  been  in- 
structed, nay  more  than  that  I  have  sympathized  with  him,  because 
when  I  heard  his  stories  and  listened  to  his  humor  I  realized 
that  his  father  and  mine  had  subscribed  for  the  same  almanac." 
(Laughter.) 

You  come,  sirs,  from  many  places,  attracted  by  the  com- 
mon interest  of  this  hour  in  a  question  that  has  gained  very  prac- 
tical value  to  Americans.  Within  a  year  our  foreign  trade,  in 

331 


The  Banquet — Tuesday  Evening 


which,  before  the  outbreak  of  this  war  we  had  little  hope  to 
participate  with  so  favorable  a  circumstance  as  is  now  present, 
has  grown  amazingly. 

If  some  man  could  rise  among  you  tonight  he  could  tell  a 
story  that  would  be  as  romantic,  as  high  in  its  literary  color,  as 
wonderful  in  the  pageant  that  it  could  unfold  in  your  mind  as 
any  that  history  affords — if  he  possessed  the  pen  of  the  poet,  the 
tongue  of  the  master  of  words,  and  with  lips  touched  by  the  altar 
coal  of  prophecy,  with  the  historic  knowledge  of  the  past,  he 
could  sketch  for  you  in  brief  outline  the  wonderful  and  romantic 
story  of  the  movement  of  the  world's  trade.  Its  first  beginnings 
in  the  dawn  of  human  history  along  the  Red  Sea,  the  movement 
that  finally  followed  the  development  of  civilization  along  the 
shores  of  the  Mediterranean,  there  as  everywhere  the  final  most 
powerful  and  continuously  impelling  force  that  in  every  age  and 
every  hour  and  among  every  people  has  continually  forced  human 
intercourse,  is  that  which  carried  the  traders  of  one  nation  into 
contact  with  men  of  every  other  nation,  until  those  early  settle- 
ments in  which  civilization  found  its  first  life  along  the  Red  Sea 
and  the  Aegean,  touched  the  very  shores  of  the  exterior  Atlantic ; 
and  then  the  Carthaginian  was  commercial  master  of  the  hour, 
and  when  he  fell  before  the  prowess  of  the  Romans,  trade  found 
its  lodgement  again  on  the  farther  shore  of  the  great  inland  sea, 
but  never  touching  the  broad  sweep  of  the  ocean  beyond  it,  until, 
in  the  great  inroad  of  the  barbarians  that  swept  down  over 
middle  Europe  all  the  civilizations,  the  institutions,  the  arts,  the 
literature,  the  trade  and  commerce  of  that  hour  fell  trampled 
and  destroyed  beneath  the  hoof  of  the  barbarian  war  horse. 
Then  a  little  smoldering  remnant  of  trade  burst  again  into  life 
in  that  magnificent  city  of  the  Adriatic  that  became  the  center 
of  the  commercial  life  of  its  era,  and  carried  with  the  trade  of 
Venice,  its  notions  of  civilization,  of  art,  of  literature,  of  manu- 
facture into  the  then  most  distant  trade  centers  of  Europe,  and 
accompanied  that  wonderful  commerce  of  those  Italian  cities, 
Florence  and  Naples,  which  carried  their  trade  into  the  very 
interior  of  England  two  hundred  years  before  English  people 
realized  the  possibilities  of  their  own  commercial  development. 

And  always  there  went  with  trade  its  hand-maidens  of  re- 
finement, of  art,  of  culture.  Among  the  politer  people,  an  ex- 
change of  information,  of  manners,  of  all  the  cultivated  science 
and  art  of  their  day,  until,  with  the  discovery  of  the  navigator's 

332 


Address  of  the  Toastmaster 


compass  man  dared  the  greater  ocean  and  the  whole  field  of 
world  trade  and  colonization  opened. 

And  yet  there  seem  to  have  been  two  or  three  things  which 
underlaid  it  all,  that  were  essential  to  the  commercial  success 
of  every  people  of  that  time,  and  that  must  be  essential 
to  the  commercial  success  of  our  hour.  Something  in  which 
to  carry  commerce,  for  no  nation  can  ever  hope  to  hold  a 
place  among  commercial  people  of  the  world  if  it  does  not  own 
the  delivery  wagons  in  which  it  sends  goods.  (Applause.)  No 
nation  can  hope  to  earn  and  win  its  way  that  is  not  free  in  the 
development  of  its  commerce  and  of  its  labor.  In  the  whole 
story  of  the  world's  life  what  nation  in  one  hundred  years  has 
demonstrated  so  completely  the  powerful  effects  of  moral  prin- 
ciple as  this  country  of  ours  in  which  opportunity  and  the  preser- 
vation of  individual  liberty  have  secured  not  only  a  safe  mixture 
of  all  the  world's  blood,  but  the  highest  assurance  of  reward  for 
character,  for  ability,  for  talent,  and  has  made  certain,  too,  the 
preservation  of  that  which  it  secured  by  the  exercise  of  its  talent, 
and  which  not  alone  brought  reward  to  him  who  possessed  it, 
but  in  its  very  exercise  brought,  too,  reward  to  the  very  social 
structure  of  which  he  was  a  part. 

But,  sirs,  though  we  have  ships  to  carry  our  goods,  though 
we  free  ourselves  in  our  rational  political  moments  of  those  re- 
strictive and  unintelligent  economic  theories  that  are  a  burden 
upon  our  trade,  upon  our  manufacturers  and  upon  the  develop- 
ment of  our  commerce,  what  shall  we  ever  do  in  a  foreign  coun- 
try if  our  capital  be  enticed  to  go  there,  if  our  commerce  take 
root,  if  our  trade  thrive,  if  the  American  who  goes  into  a  foreign 
land,  wherever  it  be,  is  not  sure  that  he  carries  with  him  the  pro- 
tection of  his  flag  and  the  certainty  that  wherever  he  is — there 
is  at  home  a  watchful  nation  whose  ward  he  is?  (Applause.)  So, 
sirs,  it  seems  that  successful  development  of  commerce,  whatever 
other  characteristics  it  may  have,  requires  carriage  for  that  which 
we  produce,  freedom  in  the  exercise  of  all  our  talents  and  organi- 
zation of  production,  and  security  for  the  American  and  for  his 
capital  wherever  he  places  it,  while  he  claims  for  himself  the 
title  of  American  citizen.  (Applause.) 

Now,  sirs,  we  fortunately  have  with  us  at  this  festal  board 
tonight  those  who  peculiarly  represent  in  their  persons  the  inter- 
ests of  neighbor  nations  in  the  great  subject  with  which  we  have 
been  dealing.  The  port  of  New  York  possesses  an  especial  ad- 

333 


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vantage  in  dealing  with  the  country  of  the  distinguished  speaker 
whom  I  now  have  the  pleasure  to  present  to  you,  because  it  seems 
that  as  early  as  1648  Governor  Peter  Stuyvesant  conferred  upon 
the  then  numberous  inhabitants  of  this  burgh  the  privilege  of 
trading  with  Brazil. 

I  have  very  great  pleasure  in  presenting  to  you  the  ambas- 
sador extraordinary  and  plenipotentiary  of  Brazil,  His  Excellency 
Domicio  da  Gama.  (Applause.) 

[His  Excellency,  the  Ambassador  of  Brazil,  made  a  brief  but  very 
happy  speech,  but  as  it  was  an  informal  address  the  stenographer's  re- 
port thereof  is  omitted  at  His  Excellency's  request.— Secretary.] 


THE  TOASTMASTER:  Your  Excellency,  I  am  sure  that  all 
who  have  had  the  good  fortune  to  hear  your  good  wishes  and 
expression  of  sympathy  carry  away  with  them  a  very  happy 
memory,  and  are  only  hoping  that  the  lessons  and  suggestions 
of  this  hour  will  be  received  by  us  in  time  to  profit  by  them,  and 
that  our  experience  will  not  be  that  of  the  colored  gentleman  I 
heard  Justice  Sanborn  tell  of,  who,  having  been  convicted  of 
homicide,  was  asked  if  he  had  anything  to  say  before  the  Court 
pronounced  the  sentence.  He  said.  "Well,  your  Honor,  I  only 
got  this  to  say,  this  hanging  is  certainly  going  to  be  a  lesson  to 
me." 

In  1906  the  United  States  had  the  good  fortune  to  send  as 
an  ambassador  to  all  of  South  America  the  most  distinguished 
of  living  American  statesmen,  the  great  ex-Senator  from  this 
State,  Elihu  Root  (applause),  who  spoke  to  the  people  of  our 
fellow  republics,  for  whom  we  have  a  peculiar  sympathy,  a  word 
for  this  nation  that  I  am  sure  expresses  the  sentiment  of  us  all 
here: 

"That  we  seek  no  victories  but  those  of  peace,  no  territory 
but  our  own,  no  sovereignty  save  sovereignty  over  ourselves,  that 
we  desire  to  expand  in  wealth,  in  wisdom,  in  spirit,  to  increase 
our  trade  and  to  get  prosperous,  but  we  do  not  believe  that  we 
shall  reach  that  prosperity  by  profiting  by  the  ruin  or  injury  of 
others;  but  that  by  concerted  action  we  shall  all  grow  great  and 
prosperous  together  on  this  hemisphere." 

We  have  the  good  fortune  to  have  as  our  guest  this  evening 
another  distinguished  representative  of  our  South  American 
neighbors,  a  scholar  whom  American  universities  have  delighted 
to  honor,  His  Excellency,  the  envoy  extraordinary  and  minister 
plenipotentiary  of  Peru;  and  I  have  the  pleasure  and  honor  to 

334 


Speech  of  the  Minister  oj  Peru 


present  to  you  Sefior  Federico  Alfonso  Pezet,  who  will  speak  to 
you  on  the  brotherly  interest  of  North  and  South  America. 
(Applause.) 

Speech  of  the   Minister  of  Peru 

THE  MINISTER  OF  PERU  :  Mr.  Toastmaster,  Mr.  Ambassador, 
Ladies,  Gentlemen :  It  is  a  very  great  honor  to  be  on  this  occasion 
the  guest  of  the  International  Trade  Conference  and  to  be  allowed 
the  privilege  of  raising  my  voice  as  a  representative  of  one  of  the 
Latin-American  countries  and  speak  before  such  a  distinguished 
gathering  of  men  who  are  doing  things  for  their  respective 
countries  and  for  the  world  at  large. 

When  the  distinguished  gentleman,  our  toastmaster  of  this 
evening,  introduced  me  to  you  he  reminded  me  of  a  few  days  ago 
when  I  had  the  honor  of  addressing  a  commercial  gathering  in 
one  of  the  cities  of  this  nation  where  the  toastmaster  got  his 
tongue  a  little  bit  twisted,  and  in  mentioning  me  as  "the  envoy 
extraordinary  and  minister  penitentiary  of  Peru/'  he  very  nearly 
landed  me  in  the  penitentiary.  (Laughter.)  I  am  pleased  to 
see  that  New  York  does  know  things  better  and  that  he  got 
around  that  nasty  word  very  well. 

His  Excellency,  the  Ambassador  from  Brazil,  told  you  a  few 
minutes  ago  that  he  was  not  prepared.  I  am  different.  I  believe 
in  preparedness.  (Applause.)  I  am  absolutely  for  preparedness, 
take  it  as  you  like  it,  but  I  am  for  it;  and  I  am  also  for  safety 
first  (laughter),  and,  gentlemen,  when  a  diplomat  is  among  gen- 
tlemen of  different  nationalities  I  do  not  believe  it  is  right  for 
him  to  let  his  tongue  get  away  from  him  and  his  heart  get  away 
from  his  head.  So,  believing  in  preparedness  and  in  safety  first, 
I  will  read  to  you  the  message  that  I  have  prepared  for  this 
occasion. 

This  message  came  to  me  through  something  that  I  saw  in 
York,  Pennsylvania,  where  I  had  the  good  fortune  to  be  a  few 
days  ago,  and  in  one  of  the  envelopes  of  their  very  progressive 
chamber  of  commerce  they  had  this : 

"Creeping  into  the  lives  of  men  everywhere  is  the  thought 
that  cooperation  is  better  than  competition.  We  need  each  other." 
(Applause.) 

A  More  Thorough  Understanding  of  the  American  Nations  as  a 
Means  of  Getting  Closer  Together 

The  members  of  the  Association  and  all  delegates  attending 
the  International  Trade  Conference,  representatives  of  commer- 

335 


ThejBanquet — Tuesday  Evening 


cial,  industrial,  banking  and  transportation  interests  of  this  and 
of  other  countries,  are  well  versed  in  all  matters  pertaining  to 
the  ends  of  the  present  Conference.  Already  several  important 
discussions  have  taken  place  at  the  sessions  held,  and  before  the 
proceedings  are  brought  to  a  close  there  will  be  many  more  such 
discussions,  so,  consequently,  I  have  nothing  to  add  to  the  gen- 
eral subject  that  could  in  any  way  assist  the  gentlemen  present  to 
acquire  a  better  knowledge  or  a  more  comprehensive  view  of 
the  questions  that  must  of  necessity  come  before  them  in  further- 
ing the  interests  of  a  cooperative  movement  in  international 
trade  promotion. 

But,  in  my  capacity  as  the  diplomatic  representative  of  a 
foreign  nation,  I  believe  that  there  is  something  which  I  may  be 
allowed  to  say  without  being  forgetful  of  the  precise  prime 
essentials  to  successful  diplomacy,  silence  and  discretion  (I  hardly 
know  which  of  the  two  should  have  the  precedence,  because  at 
times,  silence  can  be  so  very  indiscreet!).  Anyhow,  I  firmly  be- 
lieve that  on  such  an  occasion  as  this,  and  at  such  a  time  as  the 
present,  a  diplomatic  agent  may  be  permitted  to  have  a  heart  to 
heart  talk  with  men  who  are  straining  every  nerve  and  racking 
their  brains  to  further  the  ends  of  international  trade. 

It  is  this  belief  that  has  prompted  me  to  select  as  a  fitting 
theme  for  my  address  on  this  occasion  the  question  of  "A  more 
thorough  understanding  of  the  American  nations  as  a  means  for 
getting  closer  together,"  because,  while  you  gentlemen  have  to  do 
with  cause  and  effect,  while  you  have  to  consider  the  hard,  cruel, 
unsentimental,  matter-of-fact  aspects  of  each  individual  case 
that  comes  before  you,  while  you  have  to  go  into  a  labyrinth  of 
detail  work,  to  work  out  your  problems  and  have  to  look  at 
the  proposition  from  every  possible  angle  in  order  to  obtain  the 
desired  result,  it  is  in  the  nature  of  the  work  of  a  diplomatic  agent 
to  search  deeper  down,  to  go  to  the  very  foundation  of  things, 
because  it  is  part  of  his  duty  to  study  the  question  of  interna- 
tional relations,  and  no  study  of  such  relations  can  be  complete, 
can  be  thorough,  without  a  perfect,  prior  knowledge  of  the  funda- 
mentals upon  which  the  whole  structure  of  international  inter- 
course is  built. 

It  has  been  my  personal  experience  in  foreign  nations,  an 
experience  which  now  extends  over  a  period  of  more  than  thirty 
years,  and  which  has  had  to  do  with  citizens  of  many  countries 
and  peoples  of  diverse  races,  that  one  of  the  most  valuable  assets 
of  successful  work  has  been  getting  along  with  the  other  fellow, 

336 


Speech  of  the  Minister  of  Peru 


the  being  able  to  place  oneself  in  the  other's  position  and  to  look 
at  the  issues  under  consideration  from  his  viewpoint  as  well 
as  from  one's  own.  This  I  call  the  art  of  understanding,  and  1 
tell  you,  gentlemen,  it  is  an  art  that  should  be  more  widely  culti- 
vated. I  consider  it  as  the  basis  for  international  amity. 

In  the  relations  of  nations  with  one  another  it  is  essential 
that  a  certain  amount  of  give  and  take  should  be  indulged  in  on 
either  side.  This  is  so  much  more  necessary  to-day,  when  it  is 
an  acknowledged  fact  that  no  nation  at  the  present  time  can 
afford  to  look  down  on  another  because  it  may  happen  to  be 
territorially  smaller,  or  commercially  less  important,  or  financially 
less  well  off,  or,  even,  less  materially  powerful,  from  a  military 
or  naval  standpoint.  Whatever  may  have  been  the  case  in  the  past, 
there  are  visible  proofs  at  present  that  this  is  not  going  to  hap- 
pen any  more.  Nations  have  reached  the  stage  where  they  are 
alive  to  the  exact  knowledge  of  their  own  importance;  they  are 
cognizant  of  their  rights;  they  realize  what  they  owe  to  other 
nations  and  what  is  owed  them  by  all  the  other  nations.  And  con- 
sequently the  largest,  as  well  as  the  smallest,  is  prepared  to  assert 
its  rights,  should  these  be  ignored,  and,  moreover,  it  is  ready  to 
defend  them  against  any  aggression,  or  even  from  any  encroach- 
ment, or  from  an  attempt  to  curtail  or  to  limit  them  in  any  way, 
manner  or  form. 

In  this  way  every  individual  nation  as  a  sovereign  unit  is  to 
be  considered  as  an  entity  that  has  within  itself  the  means  where- 
by to  attain  the  highest  form  of  development,  and  therefore  of 
becoming  a  real  factor  in  the  shaping  of  world  policies.  This  en- 
tirely irrespective  of  its  present-day  importance  and  of  its  rela- 
tive power. 

We  have  but  to  remember  how  within  one  or  two  genera- 
tions some  nations  have  become  "World  Powers,"  to  recognize 
the  value  of  this  assertion.  And  as  history  repeats  itself,  what  has 
gone  before  may  well  occur  again  to-morrow. 

When  nations  are  willing  to  treat  others  as  equals,  and  I 
firmly  believe  that  such  is  generally  the  case  at  the  present  time, 
it  can  be  said  that  we  have  entered  on  the  high  road  of  interna- 
tional amity,  and  that  we  are  fast  leaving  behind  the  prejudices 
that  for  so  long  have  prevented  peoples  from  becoming  ac- 
quainted and  from  understanding  one  another. 

But  for  international  amity  to  be  permanent  it  is  necessary  that 
there  should  be  certain  interests  in  common.  The  same  as  hap* 
pens  in  the  case  of  individuals.  We  are  naturally  attracted  by 

337 


The  Banquet — Tuesday  Evening 


those  who  have  something  in  common  with  us ;  we  more  readily 
associate  with  those  who  feel  and  think  and  act  the  same,  or  in 
a  similar  manner  to  ourselves.  Nations  have  many  ways  of  creat- 
ing those  interests  in  common  that  are  conducive  to  good  harmony. 
It  is  the  first  duty  of  governments  to  bring  about  the  conditions 
that  will  create  harmony. 

If  we  of  the  Americas  wish  to  build  up  a  perfectly  harmonious 
whole,  and  to  establish  amongst  our  peoples  a  perfect  and  thor- 
ough understanding,  we  should  begin  by  casting  off  all  pre- 
judices that  in  any  way  may  handicap,  as  it  were,  our  desires. 
Next  we  should  cultivate  an  American  policy — that  is  a  policy 
that  would  be  common  to  all  the  nations  of  the  western  hemi- 
sphere. Such  a  policy  would  of  necessity  have  to  be  one  that 
would  be  acceptable  to  all.  Consequently,  it  would  have  to  be 
based  on  mutual  confidence,  equal  rights  and  respect  for  each 
other's  sovereignty. 

This  desire  to  get  closer  together  in  the  Americas  has  been 
coming  on  gradually.  In  its  development  many  things  have  oc- 
cured,  sometimes  to  accelerate  the  movement,  and  at  other  times 
to  retard  it;  but  there  is  no  doubt  that  since  the  moment 
James  G.  Blaine  took  up  the  Pan-American  idea  and  gave  it  a 
practical  purpose  the  great  work  has  steadily  been  progressing, 
although  as  I  said  before,  at  times,  through  some  incident,  it  has 
been  temporarily  thrown  back,  but  even  in  such  cases — and  these 
have  been  few,  happily —  the  onward  movement,  when  again 
taken  up,  has  become  more  manifest  than  it  had  been  until  then. 

Just  after  the  beginning  of  this  most  awful  European  war 
there  was  a  wild  cry  throughout  this  country  for  better  and  closer 
relations  with  the  Latin-American  countries. 

The  immediate  practical  form  that  the  new  movement  took 
was  in  the  nature  of  holding  trade  and  financial  conferences  and 
of  contributing  articles  to  the  newspapers,  magazines  and  reviews 
on  the  subject  of  "How  to  capture  the  trade  of  South  America." 

From  the  headlines  that  accompanied  many  of  these  publica- 
tions it  might  have  seemed  to  anyone  not  conversant  with  Amer- 
ican journalism  that  it  was  a  question  of  some  new  sport — such, 
for  instance,  as  the  lassoing  of  the  South  American  countries, 
roping  them  in,  as  it  were,  and  turning  them  into  the  dumping 
ground  for  all  the  many  wares  that  the  United  States  could  not 
sell  at  the  time  in  Europe  by  reason  of  the  war. 

At  the  first  hour  the  manufacturers  and  the  traders  could  de- 
vise no  other  plan  for  the  disposal  of  their  goods,  that  could  not 

338 


Speech  of  the  Minister  oj  Peru 


be  taken  by  the  warring  nations,  than  by  dumping  them  on  "our 
Sister  Republics  to  the  South  who  cannot  now  buy  from  Europe." 
I  do  not  doubt  that  to  many  a  person  this  happy  idea  must  have 
come  as  a  most  praiseworthy  method  of  helping  one's  neighbors, 
quite  in  the  nature  of  philanthropic  work.  This  attitude  was  the 
result  of  only  viewing  a  question  from  one  angle,  of  solely  taking 
into  consideration  one  set  of  interests,  one's  own— and  completely 
ignoring  the  other  party  to  the  bargain. 

I  can  remember  that  when  this  was  happening,  in  the  months 
of  August,  September  and  October  of  last  year,  I  went  about, 
and  together  with  many  others,  told  our  friends  in  the  United 
States  that  the  proper  way  to  obtain  an  increase  of  trade  with 
South  America  was  by  establishing  the  same  time-honored  policy 
of  Give  and  Take,  by  doing  by  South  America  the  same  as  the 
European  nations  had  done  by  our  countries,  viz :  proper  financ- 
ing, with  the  ultimate  view  of  creating  national  development, 
which  would  in  turn  bring  about  prosperity  with  its  natural  ac- 
companiment of  an  increase  in  the  purchasing  power  of  each 
community  so  assisted. 

I  placed  emphasis  on  the  importance  of  better  transportation 
and  on  the  necessity  of  adequate  banking  facilities,  and  again 
called  attention  to  what  Great  Britain,  Germany,  France  and 
Italy  had  accomplished  in  our  countries  by  giving  attention  to 
such  matters. 

For  quite  a  time  I  preached  a  regular  sermon,  on  "learning  to 
understand  one  another."  And  so  as  to  give  to  my  views  a 
practical  turn,  I  spoke  of  the  advisability  of  bringing  the  Peruvian 
line  of  steamers  to  New  Orleans  and  to  other  Gulf  ports,  and 
establishing  a  direct  line  that  would  take  care  of  the  whole  of  the 
trade  of  the  great  Mississippi  Valley  with  the  West  Coast  of  South 
America,  through  the  Panama  Canal. 

What  has  come  of  all  this  talk?  There  were  conferences  and 
meetings  held  in  many  of  the  cities  of  the  West  and  South,  as 
well  as  in  the  East.  The  Peruvian  line  of  steamers  did  its 
utmost  to  establish,  via  the  Canal,  direct  sailing  with  ports  of 
this  country.  I  was  authorized  at  the  time  to  state  that  if  we 
could  be  guaranteed  a  given  quantity  of  return  cargo,  say  2,000 
tons,  and  a  freight  not  lower  than  35  shillings,  we  would  bring 
our  vessels  to  New  Orleans.  I  was  informed  that  it  would  not 
be  possible  to  give  such  a  guarantee ;  but  that  we  would,  however, 
be  given  every  facility  to  obtain  the  cargoes  that  might  be  forth- 
coming. 

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The  Banquet — Tuesday  Evening 


We  did  not  come  to  New  Orleans,  but  in  May  we  decided  to 
bring  our  ships  to  Baltimore,  and  see  if  it  could  not  be  possible  to 
establish  a  permanent  service  between  the  United  States  and 
Peru. 

Our  boats  came  in  due  time  with  overflow  cargoes  of  South 
American  produce,  but  we  had  to  return  laden  with  coke,  as  there 
was  not  any  other  available  cargo.  Gentlemen,  the  experiment 
proved  a  one-sided  affair ;  it  could  not  be  profitable  under  the  cir- 
cumstances to  the  company,  and  had  to  be  abandoned. 

What,  then,  is  the  matter  ?  I  ask.  Why  is  it  that  our  efforts 
have  met  with  so  small  success  ?  Why,  practically  without  any  as- 
sistance from  you?  Yet  you  have  been  saying  and  repeating  in 
every  tone  that  you  want  to  increase  your  trade  with  South  Ameri- 
ca, that  you  must  increase  it. 

If  you  will  allow  me,  I  shall  endeavor  to  answer  my  own 
questions. 

The  matter  is  that  you  yourselves,  notwithstanding  your  tre- 
mendous development  and  the  fact  of  your  wondrous  resources, 
are  not  yet  half  awakened  to  the  new  position  that  has  been  thrust 
upon  you  by  circumstances  over  which  you  have  had  no  control : 
the  world  war  now  raging. 

Of  course,  today  you  have  become,  as  it  were,  acclimated  to 
your  new  surroundings,  but  a  year  ago  you  were  still  groping  in 
the  darkness,  unconscious  of  your  own  potentiality,  aad  in  many 
respects  you  are  still  so  today. 

You  are  slow  to  take  a  new  position,  you  have  not  yet  de- 
veloped sufficient  self-confidence.  As  a  people  you  are  ultra- 
conservative  in  commercial  and  financial  affairs,  and  consequently 
you  follow  established  lines. 

Although  your  South  and  your  Middle  West  feel  that  they 
should  like  to  become  independent  of  the  East,  and  open  for 
themselves  the  trade  channels  that  they  consider  as  the  most 
logical,  from  a  geographical  standpoint,  they  dare  not  do  it  to  the 
extent  that  they  should  in  order  to  make  the  experiment  a  suc- 
cess. Consequently,  New  York  reigns  supreme  and  remains  the 
arbiter  of  the  nation. 

The  railroad  lines  that  come  into  New  York  are  the  great 
national  arteries  that  give  life  to  the  whole  body  of  the  nation, 
and  so  it  happens  that  when  a  change  is  contemplated  and  there 
is  a  desire  or  an  attempt  to  divert  trade  into  other  channels  the 
mechanism  does  not  work,  and  the  result  reads  FAILURE. 

340 


Speech  of  the  Minister  of  Peru 


Therefore,  to  make  a  success  of  any  such  venture  it  would 
be  necessary  to  go  into  the  matter  with  perfect  thoroughness.  And 
it  is  this  that  is  left  out  of  the  reckoning  at  each  new  experiment. 

This  brings  me  back  to  my  point  of  departure — to  the  main 
topic  of  this  address — a  more  thorough  understanding  of  the 
American  nations  as  a  means  for  getting  closer  together. 

There  must  be  reciprocity  in  trade.  In  the  case  of  the  Peru- 
vian experiment  just  referred  to  this  was  absent.  We  thought 
that  a  trade  might  be  built  up,  and  that  once  our  boats  came 
here  it  would  readily  develop.  We  soon  discovered  our  mistake, 
and  as  there  was  no  incentive  whatever  shown  from  this  side, 
we  gave  up,  and  returned  our  boats  to  their  home  run — up  and 
down  the  South  Pacific,  between  Peru  and  Panama,  with  regular 
trips  to  Chilean  and  Ecuadorean  ports.  Apparently  you  were  not 
sufficiently  interested  in  us  to  put  your  best  foot  forward  in  an 
endeavor  to  make  the  experiment  a  success. 

Trade  has  to  be  built  up.  Trade  calls  for  confidence,  respect, 
and  above  all  for  reciprocal  interests.  If  we  have  to  sell  something 
that  the  other  country  needs,  it  is  easy  to  establish  trade.  But 
even  in  this  case  it  is  essential  to  the  ultimate  transaction  that 
there  should  exist  in  one  community  a  knowledge  of  the  existence 
of  the  article  for  sale  and  of  the  demand  for  it  in  the  other. 

The  early  traders  along  the  shores  of  the  Mediterranean 
carried  on  their  business  on  the  basis  of  reciprocity,  which  was 
established  through  a  knowledge  of  the  needs  of  each  other,  and 
on  an  understanding  between  them  as  to  the  best  way  to  increase 
and  improve  their  trade  relations. 

In  every  instance,  from  earliest  time,  understanding  of  differ- 
ent peoples  and  of  diverse  races  has  been  indispensable  to  proper 
trading.  How,  then,  could  you  think  for  a  single  moment  that 
there  was  nothing  else  needed  in  order  to  capture  the  so-called 
Latin-American  trade  at  the  time  that  the  European  war  broke 
out  than  to  get  ships  by  the  score,  load  them  up  with  every  con- 
ceivable class  of  merchandise  and  sail  them  toward  our  ports? 

Why,  even  in  your  transactions  with  the  red  Indians  in  the 
early  pioneer  days  you  employed  other  methods.  No,  my  friends, 
you  must  confess  that  you  were  about  making  as  great  a  mistake 
as  had  ever  been  made  by  any  people,  at  any  time. 

Fortunately,  that  from  the  great  mass  of  information  which 
was  gathered  at  the  several  conferences,  meetings,  banquets  and 
discussions  that  followed  immediately  the  agitation  created  by 

341 


The  Banquet — Tuesday  Evening 


the  war,  the  need  of  getting  closer  together  in  America  became  so 
very  manifest  that  it  gave  birth  to  the  desire  of  becoming  better  ac- 
quainted among  ourselves. 

Our  preliminary  little  conference  at  the  New  Willard  Hotel, 
in  Washington,  D.  C,  in  September  of  1914,  under  the  auspices 
of  the  Secretary  of  Commerce,  and  opened  by  the  Secretary  of 
State,  was  the  initial  step  toward  a  movement  that  has  been  preg- 
nant with  good  results.  The  real  awakening  to  the  possibilities 
of  Latin-American  trade  happened  there  and  then.  That  little  and 
very  modest  conference  was  the  parent  of  the  Pan-American 
Financial  Conference  of  May  last. 

The  principal  topics  of  interest,  such  as  banking  facilities, 
transportation,  extension  of  credits,  came  before  that  Conference 
and  were  thoroughly  discussed.  From  such  discussions  came  a 
thorough  knowledge  of  the  needs  of  each  of  the  American  nations, 
and  the  result  has  been  an  increased  interest  in  Latin-American 
affairs  in  this  country,  with  a  corresponding  increase  in  our 
countries  of  interest  for  everything  pertaining  to  the  United 
States. 

The  Conference  brought  into  close  contact  many  men  from 
all  over  the  American  continent;  it  created  a  bond  between  men 
engaged  in  similar  pursuits;  it  established  an  understanding  of 
conditions  as  they  are  here  and  as  they  are  in  Latin-America, 
and  it  helped  very  materially  to  do  away  with  the  many  preju- 
dices that  were  due — on  either  side — to  a  lack  of  sufficient  inter- 
course. 

The  National  City  Bank,  due  to  the  very  far-seeing  policy 
of  Mr.  Vanderlip,  caught  on  at  once  to  the  importance  of  closer 
relations  with  Latin-America,  and  took  advantage  of  the  facilities 
that  the  new  banking  laws  gave  to  establish  branches  in  several 
of  the  cities  of  South  America.  And  to  show  to  what  extent  it 
is  interested  in  our  countries  it  actually  publishes  a  monthly 
magazine  devoted  to  the  promotion  of  American  intercourse. 

Throughout  the  length  and  breadth  of  the  United  States  the 
desire  to  become  better  acquainted,  to  understand  each  other,  is 
manifest  in  many  ways. 

I  am  pleased  to  see  this.  I  am  pleased  to  note  the  increased 
interest  for  everything  Latin- American.  It  proves  that  we  are 
getting  to  know  one  another,  that  we  are  gradually  framing  an 
American  policy,  based  on  mutual  confidence,  trust  and  perfect 
understanding. 

342 


Speech  of  the  Minister  of  Peru 


I  have  been  told  that  there  are  2,300  schools  and  colleges 
throughout  the  country  in  which  the  Spanish  language  is  being 
taught,  that  in  many  of  these  establishments  it  is  the  one  foreign 
language  that  is  now  compulsory.  I  have  also  learned  that  in  1,100 
schools  and  colleges  the  history  of  the  Latin-American  countries 
is  being  taught,  and  that  there  are  many  hundreds  of  women's 
societies  that  have  taken  up  the  study  of  Latin- American  litera- 
ture and  history. 

Throughout  Latin  America  the  study  of  English  has  now  be- 
come general,  and  I  believe  that  in  a  few  more  years  English  and 
Spanish  will  be  spoken  equally  fluently  by  all  educated  Latin- 
Americans. 

To  my  mind  this  question  of  educating  our  future  generations 
in  a  knowledge  of  each  other  is  most  important.  And  I  consider  it 
of  the  greatest  value  from  an  economic  point  of  view.  I  go  so  far 
as  to  consider  it  the  principal  item  in  the  program  for  the  pro- 
motion of  an  American  policy. 

We  who  are  already  grown-ups  are  wont  to  meet  on  occa- 
sions such  as  this,  or  at  other  gatherings,  and  there  listen  to  the 
talks  of  persons  who  tell  us  a  great  many  interesting  things  about 
our  respective  countries,  how  to  increase  their  trade,  how  to  pro- 
mote their  welfare,  etc.,  etc.,  etc.  We  feel  interested  for  the  time 
4  being,  we  inwardly  thank  the  speaker,  when  he  is  not  too  lengthy 
and  tedious,  for  the  amount  of  information  his  talk  has  brought 
us,  or  for  having  refreshed  our  memories  in  matters  long  since 
forgotten,  but  on  leaving  the  hall,  conference-room  or  the  ban- 
quet table,  as  the  case  may  be,  we  go  back  to  the  duties  of  our 
everyday  life,  our  thoughts  revert  to  the  matters  that  of  neces- 
sity fill  our  lives,  and  in  a  short  time,  of  the  talk  or  of  the  ad- 
dress that  we  had  patiently  listened  to,  very  little  remains  in  our 
crowded  minds. 

The  fact  is  that  we  grown-ups  have  our  work  already  cut 
out,  we  are  living  our  lives,  and  very  few  of  us  are  in  a  condition 
to  allow  a  new  impression  to  take  hold  of  us  and  make  it  in- 
fluence our  future.  At  most  we  can  create  an  interest  for  new 
things,  if  they  are  of  a  practical  nature,  and  can  be  made  to  read 
"BUSINESS,"  more  especially  "PROFITS." 

So,  for  all  practical  purposes,  in  the  great  work  of  getting 
closer  together,  of  really  understanding  one  another  so  as  to  pro- 
mote a  true  and  lasting  American  policy,  it  is  essential  to  educate 

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The  Banquet — Tuesday  Evening 


the  young  peoples  of  the  Americas  in  a  thorough  knowledge  of 
one  another. 

This  question  has  an  importance  to  you  men  of  business,  be- 
cause it  is  through  this  acquired  knowledge  that  our  peoples  will 
be  better  fitted  to  trade  with  each  other.  It  will  help  to  create 
those  interests  in  common  that  are  necessary  for  the  establishment 
of  lasting  and  permanent  international  amity. 

Latin  America  needs  your  manufacturers,  needs  your  capital 
to  develop  its  natural  resources,  and  you  need  the  friendship  and 
the  esteem  of  our  peoples.  We  can  become  your  greatest  custom- 
ers, we  may  become  your  fastest  friends. 

Personally,  I  wish  both  to  happen.  I  do  everything  in  my 
power  that  is  consistent  with  my  position  to  hasten  the  accom- 
plishment of  both  ends.  And  I  should  like  to  see  your  great  lead- 
ers of  finance,  of  commerce,  of  thought,  giving  to  this  subject  of 
education  their  support. 

I  should  like  to  see  a  Chair  of  American  History,  Civiliza- 
tion and  Government  established  in  the  University  of  San  Marcos 
of  Lima,  Peru.  This  is  the  most  venerable  of  all  the  Universities 
of  South  America,  having  been  founded  one  hundred  years  be- 
fore John  Harvard  established  the  first  North  American  uni- 
versity at  Cambridge,  Massachusetts.  I  think  that  the  oldest  South 
American  university  is  a  fit  and  proper  place  for  the  establishment 
of  the  first  North  American  Chair.  I  think  that  such  a  Chair 
would  be  of  great  help  in  the  work  of  creating  an  understanding  of 
your  people,  that  it  would  be  a  bond  to  draw  us  closer  together. 
I  consider  it  is  necessary  that  the  coming  generations  of 
Latin  Americans  should  learn  to  know  you  as  you  are;  and  I 
think  it  is  your  duty,  as  far-seeing  and  progressive  business  men, 
to  interest  yourselves  in  this  question,  and  to  give  it  your  en- 
dorsement. 

A  few  weeks  ago  I  was  honored  by  Cornell  University  with 
an  invitation  to  address  the  student  body,  and  a  few  days  ago  I 
received  an  equal  honor  from  Princeton  University.  During  my 
brief  stay  at  those  great  seats  of  learning  I  was  impressed  with 
the  munificence  of  the  generosity,  in  many  instances  anonymous 
generosity,  of  your  people,  I  marvelled  to  see  how  you  had  en- 
dowed these  colleges,  how  through  these  generous  donors  they 
had  been  enabled  to  expand  their  great  usefulness.  And  I  could 
not  refrain  from  wishing  that  in  my  country  someone  would  some 
day  build  up  a  college  on  the  American  plan,  with  American 
teachers,  so  that  my  fellow-citizens  of  the  future  would  learn  to 

344 


Speech  of  the  Minister  of  Peru 


know  this  country  and  would  be  in  a  position  to  take  advantage 
of  the  great  possibilities  that  come  to  boys  and  to  girls  from  a 
thorough  American  training. 

And  when  I  went  over  that  magnificent  home  that  Mrs.  Russell 
Sage's  generosity  has  presented  to  the  women  students  at  Cornell, 
I  felt  that  if  only  some  woman  would  establish  in  Peru,  even  in 
a  modest  way,  an  American  school  for  women  the  work  of  getting 
closer  together  would  be  served  incommensurably.  Women  being 
the  foundation  of  the  home,  they  constitute  the  great  force  of 
the  nation,  inasmuch  as  it  is  they  who  give  unto  men  their  first 
inspirations  and  knowledge. 

A  great  nation  has  great  women,  and  in  passing,  I  wish  to 
pay  my  respectful  homage  of  sincere  admiration  for  the  women 
of  the  United  States,  who  have  done  so  much  toward  the  mak- 
ing of  this  nation  really  great. 

From  the  foregoing  I  would  not  wish  you  to  believe  that  in 
Peru  or  in  other  Latin- American  countries  we  have  done  nothing 
for  the  education  of  women.  We  certainly  have,  although  not 
so  much  as  you  have  and  certainly  not  so  well. 

In  my  opinion  the  education  of  women  has  attained  here  its 
highest  point,  and  her  practical  efficiency  in  co-work  with  man 
for  the  good  of  the  community  at  large  has  reached  a  stage  where 
its  great  benefits  are  felt  throughout  the  nation  in  every  branch 
of  human  activity. 

This  terrible  world  war  from  which  America  is  keeping  for- 
tunately away  has  been  the  means  of  bringing  into  closer  prox- 
imity the  nations  of  the  Americas.  Through  the  conditions 
obtaining  in  Europe  we  have  been  brought  closer  together.  New 
interests  have  sprung  up  and  made  us  realize  the  great  oppor- 
tunities that  are  ours. 

A  sentiment  of  increased  friendliness  among  the  American 
nations  has  been  the  first  outcome  of  this  awful  calamity.  Let  us 
strive  to  make  this  friendliness  permanent — not  by  words,  but 
by  deeds.  You  as  the  greater  power,  by  justice  toward  us,  and 
by  a  generous  exercise  of  your  many  sterling  qualities  in  your 
dealings  with  us  while  at  the  same  time  in  a  practical  way  doing 
all  those  things  that  are  conducive  to  material  prosperity,  by 
giving  us  the  necessary  financial  assistance,  increasing  trade  on 
terms  of  reciprocal  benefits  and  by  aiding  in  the  development  of 
our  nations'  economical,  moral  and  physical  forces.  And  we  by 
standing  by  you  in  every  emergency,  by  throwing  down  the  bars 

345 


The  Banquet — Tuesday  Evening 


of  prejudice  and  welcoming  you  as  our  helpmate  in  the  work  of 
our  greater  national  development. 

President  Wilson  has  shown  us  the  road  to  an  American 
solidarity  through  a  frank  policy  of  cooperation  in  all  matters  of 
continental  interest.  His  actions  have  paved  the  way  for  the 
better  understanding  between  the  two  great  families  that  people 
the  Western  Hemisphere.  He  has  brought  Henry  Clay's  and 
James  G.  Elaine's  Panamericanism  a  step  further  and  made  it  a 
practical  American  policy. 

It  now  rests  with  you,  gentlemen  of  finance  and  industry,  of 
learning  and  of  thought,  from  all  parts  of  the  nation  intensely 
interested  in  the  Latin-American  countries  to  put  to  practical 
purposes  the  achievements  of  diplomacy,  the  triumphs  of  politics 
and  the  results  of  scientific  study,  and  thereby  establish  on  a  firm 
and  permanent  basis  the  amity  of  the  American  nations  inter  se. 


THE  TOASTMASTER  :  Your  Excellency  needs  no  words  of  mine 
to  assure  you  of  our  appreciation  of  your  information  and  your 
valuable  paper.  However,  I  think  his  Excellency  will  realize 
that  we  are  making  long  steps  toward  a  moral  improvement 
of  our  international  manners  when  we  have  reached  a  point  in 
our  political  career  in  which  we  defend  new  policies  by  appeals 
to  the  Old  Testament,  and  when  no  man  in  public  life  today 
feels  himself  fully  equipped  for  his  political  debates  without  the 
Bible. 

Our  industry  has  been  in  the  brief  space  of  a  year  mar- 
velously  quickened  by  the  misfortunes  of  our  neighbors,  but,  sirs, 
we  realize  that  there  is  no  permanent  prosperity  founded  upon 
the  misfortunes  of  others.  (Applause.)  And  that  in  the  midst 
of  war  our  business  is  to  prepare  for  the  permanent  demands  of 
peace.  We  have  to  thank  God  that  the  raw  material  of  war 
is  not  leaving  our  great  cities  to  the  tune  of  martial  music,  and 
its  finished  product  does  not  lie  on  our  fair  soil  with  glassy  eyes 
toward  the  cold  stars.  We  realize  that  the  great  trade  problems 
which  face  us  are  those  we  must  meet  with  the  crippled  powers 
of  the  world,  desperate  with  commercial  loss,  turning  again  to 
recuperate  their  fallen  fortunes,  and  they  require  our  careful  and 
sympathetic  and  intelligent  study.  Certainly  if  this  war  has 
taught  a  lesson,  if  we  are  willing  to  learn  by  the  moral  of  an  ex- 
perience not  our  own,  it  is  that  the  essence  of  national  power  is 
efficiency — industrial  organization.  No  event  in  our  history 
has  given  us  so  great  an  opportunity  for  foreign  trade  as  the  cir- 

346 


Speech  oj  William  S.  Kies 


cumstances  of  the  great  international  struggle  of  which  we  are 
witnesses;  but  if  we  are  to  trade  with  other  peoples  we  must 
drop  something  of  the  provincialism  that  has  characterized,  in 
some  respects,  American  trade  and  industry  and  banking,  and 
follow  the  leadership  of  those  men  of  big  imagination  and  broad 
outlook  who  have  noticed  that  trade  follows  credit,  and 
learning  from  the  wisdom  of  the  Latin  author  that  where  a 
man's  money  goes  there  always  go  his  mind  and  interest. 

One  of  the  foremost  constructive  organizations  in  Amer- 
ican business  has  been  that  great  bank  in  the  city  of  New  York 
which  has  been  searching  out  the  problems  of  foreign  markets, 
and  has  boldly  entered  into  South  America  to  establish  its 
branches,  and  to  make  the  beginnings  of  a  great  association  for 
the  investment  of  capital  and  trade.  We  are  most  fortunate  to 
have  a  distinguished  representative  of  it  with  us  tonight  who 
can  talk  to  you  about  industrial  organization  and  the  financial 
problems  of  our  foreign  trade. 

I  have  the  pleasure  of  presenting  the  Vice-President  of  the 
National  City  Bank,  Air.  Kies.  (Applause.) 

Speech  of  Mr.  William  S.  Kies 

MR.  KIES:  Mr.  Toastmaster,  Ladies  and  Gentlemen:  I  was 
very  glad  indeed,  to  hear  the  minister  from  Peru  speak  about 
preparedness,  and  particularly  was  I  glad  to  hear  him  say  some- 
thing about  the  necessity  of  a  superior  hand,  something  to  guide 
himself  by,  because  very  frequently  he  misspoke  himself.  I  won- 
dered then  whether  he  had  in  mind  the  toastmaster.  If  you 
will  remember  at  the  beginning  of  the  toastmaster's  address  he 
referred  to  the  lawyer  as  having  courage  to  charge  any  foe.  The 
toastmaster  meant  to  say  the  lawyer  who  had  the  nerve  to  charge 
any  fee.  (Laughter.)  And,  in  order  that  I  might  not  make 
such  a  mistake,  I  am  going  to  follow  the  illustrious  example. 

International  Competition  and  the  Necessity  for  Organization 
What  a  study  in  contrasts  is  furnished  by  the  changed  finan- 
cial and  economic  conditions  in  this  country  today  as  compared 
with  a  year  ago.  December  last  year  found  the  stock  exchanges 
of  the  country  closed  to  prevent  hysterical  liquidation  and  a  pre- 
cipitate decline  in  security  values  which  would  have  swept  the 
country  headlong  into  a  financial  crisis.  The  mechanism  of  inter- 
national exchange  was  out  of  gear,  and  sterling  during  the  sum- 
mer had  reached  the  previously  unheard  of  rate  of  seven  dollars 

347 


The  Banquet — Tuesday  Evening 


for  cable  transfers.  Europe  had  demanded  payment  of  our  loans, 
and  in  order  to  preserve  our  financial  honor  the  banks  of  this 
country,  splendidly  cooperating,  had  formed  the  one  hundred 
million  dollar  gold  pool.  The  price  of  cotton  had  declined  to  7  2-3 
cents  a  pound.  Our  trade  balance  for  the  previous  year  had  been 
unsatisfactory,  and  business  conditions  for  a  number  of  years 
bad.  Railroad  earnings  had  fallen  off,  bank  clearings  decreased, 
the  steel  industry  was  producing  at  less  than  half  of  its  capacity ; 
manufacturing  plants  everywhere  were  either  closed  or  running 
short  time;  unemployment  was  general,  and  the  coming  winter 
was  awaited  with  dread.  Panic  was  in  the  air,  and  men's  faces 
showed  the  strain  of  the  struggle  with  problems  then  seemingly 
incapable  of  definite  solution,  and  reflected  the  fear  and  dread  of 
impending  catastrophe. 

December,  1915,  and  what  a  kaleidoscopic  change!  The 
stock  exchanges  of  the  country  have  been  for  several  months  re- 
porting a  volume  of  successive  daily  transactions  equal  to  any 
period  of  our  history.  Prices  have  reached  the  highest  point  in 
years.  The  steel  industry  is  producing  at  capacity,  with  unfilled 
orders  accumulating  at  a  remarkable  rate.  Manufacturing  estab- 
lishments in  all  lines  are  busy,  and  there  seems  to  be  work  for 
everyone  who  is  willing  to  work.  The  farmers  of  the  country 
received  record  prices  for  their  last  huge  crop,  and  government 
reports  show  another  record  crop  just  harvested,  with  prices 
again  at  a  high  level.  Bank  deposits  are  reaching  unheard  of 
figures,  and,  what  is  unusual  with  such  a  condition,  bank  clear- 
ings are  likewise  near  top  figures,  indicating  a  most  satisfactory 
volume  of  business.  Within  the  last  few  months  railroad  earnings 
show  large  increases,  with  all  available  equipment  and  rolling 
stock  in  use.  Owing  to  an  enormous  volume  of  exports  at  un- 
usually high  prices,  and  a  decrease  in  imports,  the  balance  of  trade 
in  our  favor  for  the  calendar  year  1915  will  probably  reach  the 
previously  unheard  of  total  of  one  and  three-quarters  billions  of 
dollars.  Gold  flowing  into  this  country  in  huge  quantities  from 
all  sides  has  made  us  today  the  world's  greatest  gold  market,  and 
the  American  dollar,  for  the  time  being  at  least,  has  taken  its  place 
with  the  pound  sterling  as  the  medium  of  exchange  for  the  settle- 
ment of  international  balances.  Dollar  exchange  is  today  at  a 
premium  in  practically  all  the  money  markets  of  the  world.  The 
sunshine  of  prosperity  seems  to  warm  the  land,  optimism  is 
everywhere,  and  we  face  the  approach  of  winter  with  confidence 
and  peace  of  mind. 

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Speech  of  William  5.  Kies 


But  the  striking  contrast  in  conditions  between  today  and  a 
year  ago,  this  right  about  face  in  the  trend  of  our  national  affairs, 
furnishes  material  for  serious  study  and  searching  analysis  of 
underlying  conditions  and  future  possibilities.  We  are  in  the 
midst  of  tremendous  events.  Forces  are  at  work  which  at  times 
seem  to  be  undermining  the  very  foundations  of  civilization  and 
promise  nothing  for  the  future  but  governmental  chaos  and  a 
return  to  the  rule  of  might  and  brute  strength.  Again  we  seem 
to  see  the  possibility  of  a  world  emerging  from  this  saturnalia  of 
slaughter  and  destruction,  chastened  in  spirit,  made  wise  by  bitter 
experience,  and  restored  to  reason; a  world  wherein  an  enlightened 
leadership  shall  build,  on  the  foundations  of  popular  government, 
new  nations  dedicated  to  the  perpetuation  of  peace.  But  whatever 
changes  may  result  in  boundary  lines  or  in  forms  of  government, 
whether  absolutism,  oligarchy  or  democracy  shall  hereafter  gov- 
ern Europe,  one  thing  stands  out  quite  clearly,  and  that  is  the 
tendency  developed  in  all  these  countries,  during  the  war,  toward 
a  nationalization  of  the  forces  of  production.  The  zealous  social- 
ist may  well  view  with  satisfaction  the  progress  of  events,  for  has 
he  not  seen  in  Germany  the  regulation  and  even  the  actual  taking 
over  by  the  state  of  the  instrumentalities  of  production  in  many 
lines.  He  has  witnessed  regulation  of  the  sale  and  distribution 
of  food  and  other  necessities  of  life.  The  same  extension  of  the 
functions  of  the  state,  in  a  smaller  degree  perhaps,  have  taken 
place  in  France,  in  Russia  and  even  in  England. 

When  the  horrible  work  of  destruction  shall  have  ceased,  the 
task  of  rehabilitation  will  begin.  There  must  be  a  rehabilitation 
not  only  of  physical  resources  destroyed  but  of  shattered  credits 
as  well.  Individual  effort  will  avail  little.  The  lesson  of  the 
value  of  organization  in  war  has  been  well  learned.  Such  organi- 
zation will  be  equally  effective  in  peace,  in  the  work  of  recon- 
struction. Europe  has  learned  how  to  mobilize  its  resources  for 
war.  The  machinery  for  this  purpose  has  been  created,  and  can 
be  used  with  great  effectiveness  in  organizing  its  resources  for 
winning  back  from  the  United  States  its  temporary  supremacy  in 
trade  and  commerce. 

It  is  important  that  we  should  study  most  carefully  the  pos- 
sibilities of  the  future  as  they  affect  our  own  industrial  and  com- 
mercial outlook.  There  are  many  of  us  who,  at  the  beginning 
of  the  war,  argued  that  the  inevitable  disorganization  of  in- 
dustry attendant  upon  a  great  war,  where  millions  of  men  were 
taken  from  their  productive  tasks,  would  change  the  margin  of 

349 


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competition  in  our  favor  where  heretofore,  in  many  lines,  we 
were  unable  to  compete  with  European  producers.  We  reasoned 
that  the  manhood  of  Europe  was  in  the  trenches  and  on  the  firing- 
line;  that  the  inevitable  demoralization  attendant  upon  trench  life 
would  reduce  the  productive  capacity ;  that  millions  of  the  skilled 
laborers  of  Europe  would  be  sacrificed;  that  industrial  organiza- 
tion would  be  disrupted  through  the  loss  of  foremen,  superintend- 
ents and  managers;  that  huge  occupational  taxes  would  impose 
an  unbearable  burden  upon  industry,  and  that  to  escape  the  bur- 
dens of  taxation  a  great  wave  of  emigration  would  sweep  to 
this  and  other  countries.  Because  of  this  general  throwing  out 
of  gear  of  the  machinery  of  production,  it  seemed  reasonable  to 
assume  that  the  United  States  had  before  it  its  big  opportunity 
to  dominate  permanently  the  trade  and  commerce  of  the  world. 

In  the  light  of  events  in  Europe  and  the  developments  in  the 
United  States,  those  who  have  held  these  views  may  find  com- 
pelling reasons  to  reconsider  their  former  conclusions.  We  have 
seen  developed  in  Europe  a  spirit  of  intensest  patriotism  and  a 
willingness  to  give  in  the  fullest  measure  for  country.  The 
success  of  the  tremendous  war  loans  in  Germany,  France  and 
England,  over-subscribed  in  every  instance,  is  indicative  of  the 
spirit  of  the  people.  The  women  of  these  nations  have  given  to 
the  world  an  example  of  sublime  devotion.  Who  shall  say  that 
men  and  women  who  have  unflinchingly  suffered  the  tortures 
of  war  will  not  cheerfully  bear  the  burdens  of  peace?  We  may 
reasonably  anticipate  that  with  a  willing  spirit  they  will  bend  to 
the  task  of  building  up  again  the  fortunes  of  their  native  lands, 
denying  themselves  comforts,  luxuries  and  even  necessities  in 
order  that  their  national  honor  and  credit  be  restored,  and  their 
country  regain  its  industrial  prosperity  and  commercial  power. 
Where  individual  manufacturers  need  credit  and  financing  in 
order  to  restore  a  shattered  industry  it  may  be  assumed  that  the 
government  will  help.  Where  it  is  necessary,  we  may  expect  to 
see  the  government  actually  operating  various  industries  in  order 
to  give  employment.  Everything  that  can  possibly  be  exported 
will  be  exported,  and  only  those  machines,  tools  and  supplies 
which  are  necessary  for  rebuilding  industry,  and  those  necessities 
which  cannot  be  produced,  will  be  imported.  Goods  produced 
under  these  conditions,  and  as  a  result  of  this  spirit,  will  be  sold 
in  the  markets  of  the  world  in  competition  with  our  goods.  These 
goods  will  be  sold  at  a  price  that  will  make  them  sell,  because 
their  sale  will  be  a  national  necessity. 

350 


Speech  of  William  5.  Kies 


That  the  statesmanship  of  Europe  is  anticipating  the  future, 
and  is  already  planning  for  the  trade  struggle  bound  to  take  place, 
is  proved  by  the  formation  of  organizations  in  England,  under 
Government  auspices,  for  a  study  of  trade  and  commerce,  and 
particularly  for  the  purpose  of  investigating  the  possibilities  of 
foreign  markets  now  held  by  Germany  and  being  entered  by  the 
United  States.  An  industrial  commission  has  been  appointed  in 
France  for  the  study  of  plans  for  the  rehabilitation  of  its  in- 
dustries affected  by  the  war;  in  Germany,  an  organization, 
headed  by  Dr.  Dernberg,  has  been  formed  for  the  development 
of  plans  for  a  trade  conquest  of  South  America  after  the  war 
shall  have  ended. 

Let  us  now  indulge  in  a  bit  of  frank  introspection  for  the 
purpose  or  analyzing  our  own  conditions.  The  exceptional  pros- 
perity which  we  are  now  enjoying  may  be  traced  directly  to  the 
huge  orders  for  supplies  placed  in  this  country  by  the  warring  na- 
tions. Due  to  the  urgency  of  the  need  of  our  purchasers,  high 
prices  have  been  obtained  for  our  goods.  Owners  of  factories 
which  have  been  running  for  years  with  little  or  no  profit  have  in 
one  year  made  profits  large  enough  to  pay  off  past  indebtedness 
and  to  lay  aside  a  surplus  for  the  future.  Easy  profits  breed  ex- 
travagance and  discourage  economy.  Human  nature  is  such  that 
every  individual  is  more  or  less  covetous  of  the  things  which  the 
man  just  above  him  is  enjoying.  The  aim  of  every  man,  no  matter 
how  humble,  is  to  increase  his  living  standard,  and  to  give  his 
children  greater  advantages  than  he  perhaps  himself  enjoyed. 
No  one  can  say  that  such  ambitions  are  not  laudable  and  deserving 
of  commendation.  To  raise  its  standard  of  living,  however,  labor 
must  have  higher  wages.  The  large  profits  made  by  manu- 
facturers in  munition  contracts  have  encouraged  labor,  not  with- 
out justice,  to  demand  its  share  in  such  profits.  Wages  have  been 
increased  in  these  lines,  and  the  demand  is  spreading  to  laborers 
in  other  lines.  The  significant  and  ominous  fact  that  stands  out 
above  all  others  in  the  present  situation,  is  that  we  will  be  con- 
fronted with  a  rising  wage  scale,  and  a  tendency  toward  increased 
living  standards  at  the  very  moment  when  our  competitors,  by 
force  of  necessity,  will  be  obliged  to  reduce  living  standards  and 
to  keep  wages  at  a  minimum. 

Competition  is  of  two  kinds — in  quality  and  in  price.  No 
one  has  excelled  the  American  manufacturer  in  quality  of  goods 
produced,  but  no  matter  how  good  the  quality  if  the  price  is  out 
of  line,  the  goods  cannot  be  sold.  The  price  at  which  an  article 

351 


The  Banquet — Tuesday  Evening 


can  be  sold  depends  upon  the  cost  at  which  it  can  be  placed  in  a 
particular  market.  Entering  into  the  cost  of  an  article  are  the 
cost  of  raw  material;  capital  charges,  which  include  equipment 
and  plant;  labor  costs  and  the  cost  of  distribution.  In  most  in- 
stances, by  far  the  largest  item  is  the  labor  cost,  and  next,  the 
cost  of  distribution.  It  needs  no  demonstration  to  prove  that  if 
labor  costs  are  inordinately  high  here  as  compared  with  Europe, 
the  American  product  cannot  be  sold  in  a  competitive  market  ex- 
cept at  a  loss. 

Wage  scales  are  becoming  more  and  more  inflexible  and  ar- 
bitrary. Wages  can  usually  be  moved  in  one  direction  only,  and 
that  is  upwards.  It  is,  therefore,  of  the  utmost  importance  for 
the  future  of  our  manufacturing  industries  that  the  best  minds 
in  this  country  center  their  attention  upon  the  solution  of  our 
labor  problem.  Unless  it  is  solved,  or  unless  some  means  is 
found  of  offsetting  our  great  handicap  in  labor  costs,  we  shall, 
when  the  nations  of  Europe  again  become  active  competitors,  lose 
not  only  the  foreign  markets  now  opened  to  us  by  force  of  cir- 
cumstances, but  our  domestic  markets  as  well. 

It  is  fundamentally  fair  that  in  hard  times  labor  should  share 
the  burdens  with  capital,  and  the  corollary  of  this  proposition 
is  equally  sound,  that  capital  should  share  with  labor  the  large 
profits  of  prosperous  times.  It  would  seem,  therefore,  that  the 
possible  solution  of  the  problem  lies  in  agreeing  upon  minimum 
wage  scales  based  upon  the  wages  in  competing  countries  in  the 
same  occupation,  making  due  allowance  for  differences  in  the 
cost  of  living,  increasing  wages  in  fair  proportion  to  profits  in 
prosperous  times  and  returning  to  the  minimum  standard  in 
periods  of  depression.  The  wages  must  be  fixed,  however,  in  all 
instances,  with  the  idea  of  enabling  production  to  take  place  on 
such  a  basis  as  to  permit  successful  competition  with  foreign 
manufacturers  at  home  and  abroad.  Capital,  likewise,  should 
consent  to  have  its  returns  regulated  with  the  same  competitive 
principle  in  mind. 

It  is  only  by  recognizing  the  interdependence  of  capital  and 
labor,  and  by  forming  a  partnership  on  a  fair,  broad-minded  basis, 
that  any  permanent  results  can  be  expected  looking  toward  the 
solution  of  the  labor  problem. 

As  a  prerequisite  to  any  arrangement  of  this  kind,  labor  must 
be  educated  to  an  understanding  of  the  problems  of  our  com- 
mercial and  industrial  future.  Right  now  it  is  of  extreme  im- 
portance that  labor  should  consider  increased  wages  in  the  light 

352 


Speech  of  William  5.  Kies 


of  a  bonus,  or  a  sharing  in  exceptional  profits  earned  by  employers 
as  a  result  of  the  unusual  economic  position  of  the  United  States. 
The  laboring  men  of  this  country  must  have  impressed  upon  them 
the  important  fact  that  if,  when  the  war  is  over,  wages  are  to 
remain  at  their  present  level,  competition  with  Europe  in  many 
lines  will  be  impossible.  They  should  appreciate  that  steady  em- 
ployment at  regular  hours  is  infinitely  preferable  to  half  time  and 
intermittent  idleness. 

It  is  too  much  to  expect  that  the  labor  problem  can  be  easily 
or  quickly  solved.  Experience  shows  that  labor  is  suspicious  of 
capital.  Too  often  in  the  past,  and  not  entirely  without  justifica- 
tion, it  has  considered  its  interests  as  directly  antagonistic  to 
those  of  capital.  Labor  disputes  have  usually  been  fought  out 
as  a  struggle  between  enemies,  and  rarely  has  there  been  a  real 
appreciation  of  their  mutual  interests,  and  a  discussion  of  differ- 
ences in  this  spirit.  May  we  not  hope  that  both  labor  and  capital 
will  come  to  a  prompt  realization  of  the  vast  importance  to  their 
interests  of  the  unusual  opportunity  offered  to  this  country  of 
developing  its  foreign  commerce,  and  that  with  a  clear  under- 
standing of  competitive  conditions  they  will  work  in  closer  har- 
mony to  the  same  great  end? 

But  the  reduction  of  labor  costs  and  the  working  out  of  a 
partnership  between  capital  and  labor  in  an  effort  to  keep  down 
production  costs  are  not  of  themselves  sufficient  to  meet  the  needs 
of  the  situation.  Industry  in  this  country  is  not  organized  on 
sound  economic  lines.  There  is  altogether  too  much  waste,  dupli- 
cation of  effort  and  inefficiency  in  organization. 

To  place  us  in  a  position  where  we  may  be  able  to  compete 
successfully  in  foreign  markets,  there  is  needed  intensive  organi- 
zation of  our  industries  for  the  elimination  of  waste,  and  the  de- 
velopment of  greater  efficiency.  To  keep  down  sales  costs  in 
foreign  markets,  our  manufacturers  must  have  the  right  of  com- 
bination in  the  foreign  field.  In  a  discussion  of  the  subject  of  the 
organization  of  our  industries,  we  must  clearly  understand  the 
conditions  under  which  we  are  working.  This  country  is  young, 
and  its  handling  of  economic  problems  has  been  far  from  satis- 
factory. In  these  matters,  the  nation  has  behaved  as  might  be 
expected  of  a  youth.  We  have  been  intemperate,  impetuous, 
wanting  in  foresight,  acting  often  without  deliberation  and  with- 
out an  appreciation  of  the  consequences.  Business  and  economic 
problems  have  invariably  been  handled  as  political  questions.  We 
have  gone  from  one  extreme  to  the  other. 

353 


The  Banquet — Tuesday  Evening 


The  tariff,  which  is  fundamentally  an  economic  and  business 
problem,  is  either  high  or  low  in  spots,  depending  upon  what 
section  of  the  country  has  the  preponderating  influence  in  the 
majority  party.  Every  tariff  we  have  had  in  the  last  twenty-five 
years  has  been  a  protective  tariff.  There  is  no  actual  principle 
of  free  trade  or  protection  involved.  It  is  simply  a  question  of 
the  degree  of  protection,  fixed  without  any  regard  to  the  real  pur- 
pose of  the  protection  principle,  namely,  the  difference  in  the 
cost  of  production  here  and  abroad.  The  worst  of  it  is  that  the 
job  of  tariff-making  is  never  completed;  there  is  always  some- 
thing to  be  undone,  changed  or  added  to.  The  result  is  that  no 
manufacturer  in  the  United  States,  making  an  article  which  must 
meet  foreign  competition,  can  safely  plan  for  the  development 
of  his  business  over  a  period  longer  than  the  life  of  one 
administration. 

The  railroads  of  the  country  have  suffered  seriously  because 
of  this  manner  of  handling  economic  questions.  At  first  they 
were  encouraged,  in  some  instances  by  subsidies,  to  build  railroads 
in  undeveloped  parts  of  the  country.  For  many  years,  these  roads 
did  not  pay.  They  were  allowed  to  charge  whatever  rates  they 
wanted  to,  with  no  attempt  whatever  at  regulation.  Along  the 
lines  of  these  roads  hundreds  of  thousands  of  acres  of  valuable 
farming  lands  have  been  developed,  and  prosperous  cities  have 
grown  up.  The  roads  themselves  have  been  obliged  to  rebuild 
their  lines  and  re-equip  two  or  three  times  on  account  of  the  intro- 
duction of  heavier  rails  and  better  equipment.  By  reason  of  the 
lack  of  regulation,  abuses  crept  in — then  suddenly  a  popular 
clamor  developed  against  the  railroads,  and  forty-eight  States 
and  the  National  Government  commenced  to  pass  restrictive  laws 
against  the  railroads,  ill-considered  in  many  instances,  and  all  re- 
sulting in  hampering  their  usefulness  and  bringing  their  develop- 
ment to  an  absolute  standstill.  Railroad  construction  in  the  last 
few  years  has  practically  ceased.  The  list  of  railroads  being 
obliged  to  pass  dividends,  default  on  interest  payments,  and  appeal 
to  the  courts  for  the  appointment  of  receivers,  is  anything  but  a 
credit  to  this  country. 

In  the  development  of  the  resources  of  this  country  capital 
was  given  a  free  hand.  When  our  first  great  combinations  or 
trusts  were  organized,  they  were  not  only  favorably  received,  but 
we  pointed  to  them  with  pride,  as  evidence  of  the  bigness  of  our 
prosperity.  In  many  instances  these  large  aggregations  of  capital 
built  up  monopolies  in  their  lines,  unfair  practices  were  common. 

354 


Speech  of  William  5.  Kies 


and  abuses  of  many  kinds  crept  in.  The  politician  and  the  dema- 
gogue suddenly  found  a  new  subject  for  oratorical  denunciation, 
and  again  we  went  to  the  other  extreme.  It  was  decreed  that 
combinations  of  formerly  competing  industries  should  no  longer 
exist,  and  we  proceeded  to  break  up  in  many  cases  efficient  or- 
ganizations for  the  purpose  of  compelling  an  artificial  competition 
between  the  constituent  parts  of  the  organization.  In  our  hand- 
ling of  the  trust  problem,  we  refused  to  recognize  the  value  of 
organization  in  industry,  and  to  save  that  which  was  economically 
sound.  As  a  result  of  the  passage  of  the  Clayton  Anti-Trust 
measures,  we  are  today  hopelessly  handicapped  in  our  efforts  to 
build  up  foreign  markets.  Forced  to  meet  organized  forces  of 
production  in  foreign  markets,  our  manufacturers  are  denied  the 
right  of  cooperative  effort  and  are  obliged  to  send  individual  rep- 
resentatives into  foreign  markets ;  they  are  forbidden  the  right 
of  an  agreement  on  prices  in  such  markets,  and  are  actually 
forced  to  compete  against  each  other,  thus  making  the  business 
unprofitable  to  all,  to  the  entire  satisfaction  of  our  foreign  com- 
petitors. An  arrangement  for  the  pooling  of  expenses  and  the 
dividing  of  profits  would  result  in  a  more  intensive  and  far  less 
expensive  handling  of  a  foreign  market  in  a  particular  line. 

It  is  encouraging  to  note  that  the  Federal  Trade  Commission 
is  seriously  studying  these  problems  of  organization,  and  that  it  is 
giving  every  evidence  of  an  earnest  desire  to  be  of  real  assistance 
to  the  manufacturing  industries  of  this  country  in  the  movement 
to  build  up  our  foreign  markets.  We  have  every  reason  to  hope 
that  the  commission's  investigation  will  lead  it  to  recommend  to 
Congress  an  amendment  to  the  trust  act  permitting  combinations 
in  foreign  trade  on  a  fair  and  equitable  basis. 

Realizing,  however,  the  fundamental  handicaps  under  which 
our  industries  are  laboring  by  reason  of  the  defects  in  our  political 
system  and  the  lack  of  real  consideration  given  to  economic 
problems,  we  must  plan  our  development  so  far  as  possible  along 
lines  economically  sound  and  yet  within  the  law.  There  are  no 
restrictions  in  the  laws  against  the  organization  of  allied  indus- 
tries. These,  wherever  possible,  must  be  brought  under  one 
effective  management  and  duplication  of  effort,  particularly  in 
distribution,  eliminated.  As  an  illustration  of  a  possible  economic 
organization,  consider  the  case  of  the  manufacturers  of  shelf 
hardware — one  makes  a  saw,  another  a  hammer,  another  a  wrench 
another  an  axe — each  establishment  has  its  force  of  salesmen, 
its  purchasing,  its  credit,  its  advertising  and  its  financial  depart- 

355 


The  Banquet — Tuesday  Evening 


ments.  An  economic  organization  of  this  shelf  hardware  in- 
dustry by  consolidation  of  individual  plants  would  permit  produc- 
tion at  greater  efficiency  and  at  a  cheaper  price;  would  provide 
a  steel  plant  for  furnishing  tool  steel,  a  woodworking  plant 
for  handles,  one  purchasing  department  for  other  supplies,  a 
consolidation  of  credit,  financial  and  advertising  departments, 
and,  of  most  importance,  the  doing  away  with  separate  sales 
organizations,  promoting  sales  campaigns  for  each  article.  One 
salesman  could  sell  a  complete  line  of  shelf  hardware  as  easily 
as  he  could  sell  one  article. 

A  close  study  of  this  subject  of  organization  of  our  in- 
dustries would  develop  many  possible  means  of  lowering  pro- 
duction costs  and  result  in  the  placing  of  our  industries  on  a 
more  scientific  basis. 

We  have  the  greatest  resources  of  any  nation  in  the  world. 
If  we  could  use  them  scientifically  and  economically,  we  might  be 
able  to  overcome  the  difference  in  wage  costs  and  meet  the  com- 
petition of  any  country.  Cheap  water  power  and  coal  are  im- 
portant factors  in  production.  We  have  an  abundance  of  both. 
In  the  reorganization  of  our  industries  it  may  be  possible  that 
many  plants  will  have  to  be  moved  to  take  advantage  of  fuel 
supplies.  Inventive  genius  must  be  encouraged  to  develop  further 
labor-saving  devices. 

The  contest  between  nationalized  effort  across  the  water  and 
individual  effort  here,  handicapped  by  governmental  restrictions, 
may  seein  to  be  unequal,  but  we  must  place  our  faith  in  the 
efficiency  engineer,  the  inventive  genius  of  the  Yankee  mechanic, 
the  resourcefulness  of  the  American  salesman,  and  the  untiring 
energy  of  our  industrial  leaders. 

We  must  organize  not  alone  the  forces  of  production,  but 
the  sources  of  capital  in  this  country.  A  factor  of  greatest  help- 
fulness in  foreign  trade  is  the  investment  interest  of  a  country  in 
a  particular  foreign  market.  Germany  and  England  have  nearly 
five  billion  dollars  invested  in  South  America.  It  is  not  necessary 
to  argue  the  value  of  such  investments.  English  investments  in 
South  American  railroads  means  that  English-made  cars,  pulled 
by  English-built  locomotives,  will  run  over  English-rolled  rails ; 
that  all  purchases  of  supplies  will  be  made  in  London;  that 
the  roads  will  be  managed  by  Englishmen,  and  that  the  influence 
of  the  roads  in  the  country  through  which  they  run  will  be  exerted 
in  favor  of  the  advancement  of  England's  interests.  A  permanent 

356 


Speech  of  William  S.  Kies 


market  is  thus  made  for  English  goods  which  is  quite  safe  from 
attack. 

Heretofore  in  this  country  we  have  made  few  foreign  invest- 
ments, partly  because  we  have  had  so  much  need  of  capital  in 
our  own  country,  but  mainly  because  there  have  been  no  organized 
facilities  in  this  country  for  the  purpose  of  analyzing  and  investi- 
gating foreign  investments.  Happily,  the  machinery  for  this  work 
has  been  provided  during  the  last  month  in  the  organization  of 
the  American  International  Corporation. 

Sir  George  Paish,  in  an  article  published  in  the  London 
Statist  in  May,  1914,  estimated  the  annual  income  of  the  people 
of  the  United  States  at  about  thirty-four  billion  dollars.  Other 
authorities  have  estimated  the  income  variously  from  thirty-two 
to  thirty-seven  billion  dollars.  Upon  our  ability  to  save  out  of 
this  large  income  substantial  sums  for  investment  in  the  upbuilding 
of  the  resources  of  foreign  countries  depends,  to  a  large  degree, 
the  future  prosperity  of  this  country.  Across  the  water  men  are 
sacrificing  everything  for  country.  Here,  blessed  with  peace,  may 
not  a  sacrifice,  but  slight  in  comparison,  be  made  in  the  interest 
of  our  country's  future?  If,  as  the  result  of  the  development  of 
a  spirit  of  thrift  and  economy  in  this  country,  large  sums  of 
money  were  to  be  available  for  investment  purposes  in  South 
America,  in  Europe  and  in  the  Orient,  we  could  purchase  for 
ourselves  investment  interests  in  foreign  markets,  which  would 
become  permanent  sources  of  income  to  this  country. 

The  demands  for  investment  capital  in  the  next  few  years 
will  be  unprecedented.  Europe  will  have  no  money  for  South 
America,  for  China,  or  for  any  of  the  countries  that  have  here- 
tofore been  dependent  upon  it.  It  will,  in  fact,  need  to  draw 
upon  the  world's  available  capital  supply  for  money  for  rehabili- 
tation purposes,  and  this  country  will  be  the  main  source  of  that 
supply.  It  would  seem,  therefore,  that  every  citizen  in  this 
country  at  this  time  has  a  twofold  duty  and  that  by  performing 
it  he  is  rendering  a  real  patriotic  service.  First  is  his  duty  to 
reduce  his  expenditures,  practice  thrift  and  save;  and,  second,  to 
forego  the  temptation  of  speculative  investments  and  to  invest 
his  savings  where  they  will  do  his  country  the  most  good  in  the 
upbuilding  of  legitimate  enterprises  at  home  and  in  the  develop- 
ment of  the  resources  of  countries  whose  markets  are  being 
sought. 

357 


The  Banquet — Tuesday  Evening 


Successful  development  of  a  permanent  foreign  trade  will, 
in  its  last  analysis,  depend  upon  the  growth  of  a  broader  spirit  of 
nationalism  in  our  commerce. 

In  the  building  up  of  a  foreign  market,  any  American  enter- 
prise that  aims  to  develop  facilities  and  service  should  receive 
unqualified  support.  American  shipping  lines  wherever  estab- 
lished should  be  used  in  preference  to  those  of  other  countries 
even  at  a  monetary  sacrifice.  No  English  merchant  would  think 
of  sending  his  collections  through  a  bank  which  did  not  use  the 
branches  of  an  English  bank  wherever  possible.  The  predomi- 
nant idea  at  all  times  should  be  that  anything  which  will  en- 
courage or  help  American  enterprise  in  a  foreign  market  should 
be  done,  because  American  success  in  any  line  helps  to  build  up 
the  prestige  of  all  Americans  in  a  particular  market.  The  good 
name  of  American  manufacturers  must  be  protected.  Our  efforts 
to  build  up  permanent  markets  may  often  be  seriously  handi- 
capped. If  certain  exporters  are  guilty  of  unfair  practices  and 
trickery  in  their  dealings  with  foreign  customers,  their  acts  will 
nullify  the  efforts  to  extend  American  trade.  Many  complaints 
have  been  received  from  South  America  in  regard  to  our  failure 
to  follow  shipping  directions;  to  our  refusal  to  grant  reasonable 
terms ;  to  the  increase  of  prices  after  orders  have  been  given ;  and 
to  substitutions  in  orders  and  the  shipping  of  inferior  goods. 

Every  American  manufacturer  interested  in  South  America 
is  deeply  concerned  in  maintaining  the  good  name  of  the  manu- 
facturers of  this  country.  All  suffer  through  the  acts  of  a  few. 
An  organized  sentiment  among  manufacturers  interested  in  ex- 
port business  must  be  built  up  which  will  compel  those  who  en- 
gage in  foreign  trade  to  live  up  to  the  ideals  of  business  honesty 
and  integrity  in  their  dealings  with  foreign  countries. 

No  nation  was  ever  favored  with  opportunity  so  big  and  a 
future  so  promising  with  possibility  of  achievement.  Whether 
history  shall  record  this  country  as  rising  to  the  occasion  and  tak- 
ing fullest  advantage  of  its  opportunity  will  depend  upon  whether 
our  national  character  is  strong  enough  to  make  present  sacri- 
fices for  future  permanent  good,  upon  the  education  of  our  people 
to  an  understanding  and  appreciation  of  the  great  value  of  a 
permanent  foreign  commerce  to  this  country;  and,  of  most  im- 
portance, upon  the  development  of  a  nation-wide  cooperative 
spirit  that  shall  respond  generously  and  unselfishly  to  the  call  for 
united  action  in  this  great  moment  of  our  country's  history. 

358 


Speech  of  Professor  Jenks 


THE  TOASTMASTER:  Gentlemen,  we  are  debtors  to  the  dis- 
tinguished banker  who  has  favored  us  with  his  searching  and 
helpful  analysis  of  this  critical  situation.  On  behalf  of  the  bar, 
I  even  withdraw  any  sense  of  resentment  at  those  unhappy  re- 
marks about  the  lawyers. 

I  remember  Mr.  William  Livingston,  the  former  president 
of  the  Association  of  Bankers,  related  not  long  since  a  story 
of  the  days  when  banking  was  not  so  confident  nor  so  great 
as  it  is  today.  He  remembered  that  in  the  early  days  in  Wiscon- 
sin, where  lumber  villages  were  abandoned  as  the  work  was 
finished,  and  were  sometimes  re-inhabited  by  those  who  came  to 
work  the  stumpage,  and  he  recalled  how,  in  one  of  those  passing 
successions  of  ownership  one  merchant  was  very  much  astonished 
to  have  a  man  appear  in  his  store  one  morning  and  offer  him  one 
hundred  dollars  for  deposit.  He  went  outside  and  discovered  that 
there  had  been  a  bank  in  the  store  which  he  now  occupied,  and 
that  the  banker's  sign  still  hung  there.  "Why,"  said  Mr.  Livings- 
ton, "in  the  course  of  four  days  he  received  four  other  deposits 
for  the  same  purpose,  and  on  the  fifth  day  he  became  so  confident 
that  he  put  in  fifty  dollars  himself." 

We  have  the  good  fortune  to  have  at  our  board  this  evening 
one  who  has  earned  a  national  reputation  as  a  distinguished  stu- 
dent of  the  various  problems  so  intimately  connected  with  the 
development  of  foreign  trade,  and  who  has  made  great  contribu- 
tions to  the  spread  of  education  upon  that  subject  among  the 
youth  of  our  land. 

I  have  the  pleasure  of  presenting  Dr.  Jenks,  of  New  York 
University ;  and  he  is  at  liberty,  without  restraint,  in  the  selection 
of  a  subject  that  will  most  interest  you  at  this  hour.  (Applause.) 

Speech  of  Professor  Jenks 

PROFESSOR  JEREMIAH  W.  JENKS:  Mr.  Toastmaster,  honored 
guests  from  our  sister  American  republics,  ladies  and  gentle- 
men :  At  this  hour  of  the  night,  and  after  the  learned,  searching 
and  eloquent  addresses  to  which  you  have  listened,  the  only  sub- 
ject that  it  would  be  possible  for  one  to  take,  I  think,  would  be 
that  one  most  interesting  subject  of  all,  ourselves.  In  conse- 
quence, I  am  going  to  ask  you  to  permit  me  to  speak  very  per- 
sonally and  directly.  It  is  my  business  as  a  student  of  economics 
— that  means  a  student  of  business,  to  look  somewhat  into  the 
functions  of  business  men  in  a  community,  and  to  note  what 
business  men  are  doing  in  government,  and  it  has  seemed  to  me 

359 


The  Banquet — Tuesday  Evening 


for  some  time  that  those  great  tasks  which  are  imposed  upon 
business  men,  as  has  just  been  so  thoroughly  set  forth  by  Mr. 
Kies,  are  not  fully  appreciated  by  all  business  men. 

In  the  early  days  of  the  Republic  it  was  felt  by  Washington 
and  Hamilton  that  the  only  possibility  for  the  continued  existence 
of  the  Republic  of  the  United  States  was  that  the  central  gov- 
ernment of  the  United  States  bring  in  as  its  chief  supporters 
the  leading  business  men  of  the  country.  And  the  first  tariff 
policy  formulated  by  Hamilton  was  framed  with  that  distinct 
purpose  in  mind — to  bring  the  great  business  men  of  the  country 
to  the  support  of  the  government. 

Since  I  have  been  sitting  at  this  table  I  have  had  handed  me 
a  cablegram  from  Shanghai  in  which  it  is  stated  that  the  in- 
cipient revolution  that  we  were  reading  about  in  the  papers 
yesterday  and  today  has  been  suppressed,  that  the  leaders  of 
that  revolution  have  been  on  trial  today  in  the  courts  of 
Shanghai,  that  everything  is  quiet  there  and  no  further  trouble 
is  anticipated.  The  reason  why  the  present  new  republic  of 
China  will  live — because  I  believe  it  is  going  to  live — is  because 
the  policy  followed  by  the  President  Yuan  Shih-kai  has  met  the 
approval  of  the  Chinese  business  men  as  the  policy  of  the  empire 
that  preceded  never  did  meet  the  approval  of  the  Chinese 
business  men.  If  foreigners  will  avoid  undue  interference — that 
is  the  only  danger  for  China — the  business  men  of  China  getting 
back  of  the  new  republic  will  make  China  a  great  nation.  Give 
it  ten  years  of  non-interference  and  China  is  safe,  because  the 
business  men  of  China  are  back  of  the  government. 

Mr.  Kies  mentioned  a  number  of  governmental  policies. 
We  all  know  what  the  subjects  are  that  have  been  touched 
upon  by  the  President  in  his  message  today.  Every  one  of 
the  policies  that  are  mentioned  today,  including  that  of  de- 
fense, is  primarily  a  policy  of  business;  and  how  many  busi- 
ness men  are  there  in  Congress  today?  If  all  of  the  lawyers 
in  Congress  were  as  familiar  with  business  as  is  our  distin- 
guished toastmaster,  then  we  might,  of  course,  trust  our 
interest  to  lawyers  in  Congress.  (Applause.)  But  I  suppose 
most  of  us  who  are  quite  familiar  with  the  lawyers  in 
Congress  judge  that  they  are  not,  after  all,  the  best  repre- 
sentatives of  the  business  men  of  this  country;  the  policies  of 
our  country  having  been  shaped,  as  they  should  have  been  shaped, 
for  the  stability  of  our  country,  rich  and  poor  alike,  in  the  in- 
terests of  business,  as  we  all  know.  Now,  it  does  seem  to  me 

360 


Speech  of  Professor  Jenks 


that  it  is  the  duty  of  the  business  men,  broadly,  thoroughly  to 
study  these  questions  and  then  to  see  to  it  that  they  take  enough 
active  part  in  politics  so  that  they  will  have  the  right  representa- 
tives to  speak  their  will. 

Aside  from  this  question  of  politics,  I  think  anyone  who 
looks  into  the  things  that  have  been  done  by  the  business  men 
within  the  last  few  years  must  think  that,  after  all,  they  are  the 
moving  spirits  in  the  country.  I  was  speaking  just  before  I 
came  in  with  Professor  Johnson,  professor  in  the  University  of 
Pennsylvania,  as  you  know  an  able  business  man  himself  and 
a  most  thorough  student  of  business,  and  he  called  my  at- 
tention to  the  fact  that  these  great  improvements  in  education 
of  which  the  minister  from  Peru  has  spoken  have,  after  all,  sprung 
from  business  men  because  of  business  needs  of  the  country  and 
because  those  needs  demanded  it.  These  great  gifts  to  the  uni- 
versities are  very  largely  in  these  latter  days  gifts  to  train 
people  in  such  a  way  that  they  may  conduct  the  business  and 
public  affairs  of  the  nation  more  wisely. 

You  have  been  told  that  our  schools  teach  Spanish.  My 
school  does.  Why?  Because  business  men  want  to  have  our 
young  men  study  Spanish.  They  are  getting  ready  for  their 
future  life's  work,  and  so  our  curriculum  drifts  in  that  direction. 
Whatever  you  want  you  can  have  along  educational  lines. 

Another  thing  that  has  been  touched  upon  here  very  eloquent- 
ly by  all  of  the  speakers  has  been  this :  That  we  need  a  spirit  of 
cooperation;  that  we  need  to  encourage  brotherhood  among  the 
nations;  that  we  need  fair  dealing.  It  is  not  a  week  since,  in 
talking  with  some  business  men  with  reference  to  conditions  in 
this  country,  it  was  said  that  the  great  advance  in  morals  in  this 
country  for  the  last  twenty-five  years  had  come  from  business 
men,  because  business  men  wanted  the  improvement  to  begin 
with,  and  because  they  found  it  paid.  I  happen  of  late  to 
have  been  taking  part  in  an  investigation  into  the  changing 
conditions  in  this  country  during  the  last  thirty  years,  and 
one  of  the  most  striking  things  that  is  to  be  noted  is  the  change 
in  business  methods,  and  in  the  whole  attitude  of  business 
men.  Why  is  it  that  on  our  railroads  the  engineer,  the  train- 
man, practically  everyone  is  temperate  now  as  compared  with 
what  he  was  earlier?  Because  of  the  pressure  of  business  upon 
him.  Why  is  it  that  our  clerks,  our  employees  all  through  the 
business  institutions,  our  men  of  high  standing,  are  temperate? 
They  must  be  temperate  or  they  cannot  hold  their  jobs.  Business 

361 


The  Banquet — Tuesday  Evening 


demands  it.  I  was  talking  the  other  day  with  a  man  in  my  house 
with  reference  to  a  person  who,  he  thought,  was  not  quite 
living  up  to  a  promise  he  made  a  day  or  two  before.  He  said, 
"We  cannot  stand  that  in  Wall  Street."  The  one  unpardonable 
sin  in  Wall  Street  is  that  when  a  man  makes  a  contract,  even 
though  it  be  merely  by  a  sign,  he  welch  on  it.  That  cannot  be 
tolerated.  I  have  often  thought  that  by  far  the  greatest  sin,  from 
a  community  viewpoint,  is  untrustworthiness.  Society  absolutely 
rests  upon  our  confidence  in  one  another,  and  that  confidence  can- 
not be  had  without  truthfulness,  living  up  to  contracts,  trust- 
worthiness all  along  the  line. 

Here  is  another  little  incident  that  interested  me.  Some  little 
time  ago  I  was  asked  to  speak  before  an  advertisers*  club 
and  was  talking  with  the  president  of  the  club,  he  said,  "We 
have  been  devoting  ourselves  primarily  for  the  last  year  or  two 
to  seeing  to  it  that  advertisers  tell  the  truth,  that  they  are 
honest  all  the  way  through,"  and  that  again  is  a  movement  that 
we  cannot  check.  All  business  men  are  back  of  it.  They 
must  be  back  of  it. 

I  wonder  if  you  will  let  me,  in  two  or  three  minutes,  go  just 
a  step  farther  along  this  same  line.  Our  toastmaster  spoke  a 
moment  ago  about  the  way  in  which  the  business  men  are  studying 
the  Bible,  the  Old  Testament ;  spoke  in  a  joking  kind  of  way,  but  I 
think  this  statement  should  be  taken  seriously.  It  is  a  rather  new 
view  of  religion.  When  Mr,  Kies  said  with  reference  to  the  duty 
that  rests  upon  business  men,  if  we  care  for  the  future  of  our 
country,  to  stand  together,  to  work  hard  for  the  benefit  of  our 
country  and  not  for  our  temporary  pleasure,  I  thought  he  was 
practically  saying  that  we  ought  to  devote  ourselves  to  our  busi- 
ness very  largely  in  a  spirit  of  religion.  I  think  so,  too.  It  would 
take  the  superstitious  element  out  of  religion  and  keep  in  merely 
the  common  sense.  In  the  instance  I  was  speaking  of  at  the 
advertising  club,  this  statement  was  made: 

"All  good  advertising,  all  the  best  salesmanship  depends 
upon  an  intimate  knowledge  of  human  nature." 

Good  oratory,  good  salesmanship,  means  this :  That  we  must 
be  able  to  put  ourselves  into  the  attitude  of  the  other  man,  under- 
standing his  nature  and  his  position  thoroughly,  and  then  bring 
him  around  to  our  viewpoint  by  showing  him  the  advantage 
that  it  will  be  to  him  to  come  in  that  direction.  Now,  did  you 
ever  stop  to  think  about  this  matter?  And  I  speak  of  it  perfectly 
simply  and  directly  and  not  as  a  teacher  of  religion — as  I  am 

362 


Speech  oj  Professor  Jenks 


not — did  you  ever  think  of  it,  that  the  personality  who  has 
made  the  greatest  change  in  our  social  circumstances  in  the  whole 
political  world,  because  he  understood  the  fundamental  principles 
of  human  nature  best,  because  he  was  the  greatest  social  psy- 
chologist that  ever  lived,  was  Jesus  Christ?  That  is  a  fact.  He 
understood  the  fundamental  principles  of  human  nature  better 
than  anyone  else  has  ever  done,  and  He  laid  down  very  simply 
and  very  directly  and  lived  out  those  principles  best,  in  such  a  way 
that  it  has  practically  changed  all  society  since  His  time.  Let 
me  just  name  one  or  two  points  and  you  will  see  it  was  good 
business  which  He  was  teaching. 

We  hear  a  great  deal  about  the  unselfishness  of  Jesus 
Christ;  that  He  taught  we  must  be  devoted  to  the  welfare  of 
others.  That  is  true,  and  we  are  not  going  to  have  the  desired 
extension  of  trade  with  South  America  unless  we  have  that 
spirit,  too.  But  the  most  fundamental  thing  and  the  newest  thing 
in  the  teaching  of  Jesus  Christ  was  this:  That  each  man  was  to 
be  held  responsible  for  his  own  acts.  That  was  something  abso- 
lutely new.  The  great  teachers  of  the  ancient  days  like  Plato, 
had  always  presumed  a  slave  class  that  were  to  do  as  they  were 
told.  Amongst  the  Hebrews  in  Palestine  where  Jesus  Christ 
Himself  was  living  no  man  was  expected  to  think  for  himself; 
he  was  to  follow  rules  laid  down  by  priests;  it  was  substantially 
in  this  regard  an  absolute  sovereignty.  He  taught  that  every 
individual,  no  matter  how  poor  or  how  ignorant,  was  to  be  held 
responsible  and  that  his  position  here  and  hereafter  would  depend 
upon  his  own  decisions.  That  was  what  cost  Him  His  life  more 
than  anything  else. 

Now  that  feeling  of  responsibility  is  what  we  want  in  busi- 
ness; and  that  is  what  makes  a  business  man  successful.  That 
is  what  makes  a  man  a  master  of  business  when  he  is  directing 
a  great  labor  force.  If  he  can  get  each  one  of  his  laborers  to 
feel,  "I  must  be  responsible  for  my  job,"  and  the  boss  to  say,  "I 
must  be  responsible  for  my  job  to  those  above  me,"  and  take  the 
responsibility  and  hold  it,  that  is  religion,  and  he  is  following 
the  most  fundamental  principle  of  the  Christian  religion  that 
there  is.  We  cannot  lay  off  our  responsibilities  upon  any  priest, 
upon  any  teacher  or  upon  anyone  else.  We  must  bear  that  re- 
sponsibility ourselves  and  take  the  consequences  or  we  are  not 
doing  as  Jesus  did.  And  that  implies  that  we  must  be  independ- 
ent in  our  thinking.  That  implies  that  if  we  are  to  take  responsi- 
bility we  must  study  our  subject ;  we  must  know  what  it  is  that 

363 


Sixth  Session — Wednesday  Morning 


we  are  doing  before  we  act.  And  just  there,  again,  we  often 
misunderstand  the  Bible  teaching.  After  that  Marvelous  Child 
had  shown  Himself  the  peer  of  the  wisest  men  of  His  day  at 
twelve  years  of  age,  He  studied  and  thought  twenty  years  more 
before  He  went  out  and  said  anything  in  public  to  show  what 
His  plan  for  reform  in  society  was.  We  must  make  the  same 
careful  preparation. 

I  did  not  come  here  to  preach,  but  I  do  feel  this:  That  the 
business  men  who  are  going  to  succeed  in  dealing  with  these 
foreign  markets,  in  handling  their  own  affairs,  in  directing  their 
own  business  within  their  establishments,  in  doing  their  duty 
by  the  country  outside,  in  taking  their  proper  share  in  legis- 
lation, will  do  it  the  best  and  learn  the  most  if  they  make  of 
their  business  a  religion  in  this  perfectly  simple  direction  in  which 
I  have  spoken.  They  must  take  the  responsibility  that  they  ought 
to  feel  as  citizens  of  a  great  country.  What  business  has  anyone 
of  us  to  think  exclusively,  selfishly  of  his  own  little  affairs  when 
we  have  a  hundred  million  people  here  with  their  welfare  depend- 
ing to  a  considerable  extent  upon  the  act  of  each  of  us.  We  must 
bear  the  responsibility,  and  we  must  do  it  studiously  and  thor- 
oughly, as  the  founder  of  the  Christian  religion  did,  and  then  we 
must  do  it  in  this  marvelous  spirit  of  unselfish  brotherhood  that 
has  been  so  well  spoken  of  by  the  other  speakers  of  the  evening. 
When  the  business  men  of  the  country  get  that  spirit  into  their 
business,  not  only  will  their  business  be  most  successful,  but  the 
world  will  bless  them  for  their  way  of  doing  business.  (Ap- 
plause.) 

THE  TOASTMASTER:  Gentlemen,  with  that  handsome  bene- 
diction from  our  friend  of  New  York  University  the  exercises 
of  the  evening  are  concluded,  with  Godspeed  to  each  of  you. 


SIXTH  SESSION 

Wednesday   Morning,  December  8,  1915 

The  Conference  was  called  to  order  at  10:15  A.M.,  by  Colonel 
George  Pope. 

COLONEL  POPE:  Gentlemen,  the  sixth  session  of  this  Con- 
ference will  be  presided  over,  and  I  am  sure  to  your  pleasure 
and  satisfaction,  by  Mr.  William  McCarroll,  formerly  a  vice- 
president  from  New  York  of  the  National  Association  of  Manu- 

364 


Italy — Italian  Commercial  Attache 


facturers  and  Public  Service  Commissioner  of  the  City  of  New 
York,  a  gentleman  who  has  had  much  experience  in  general 
affairs. 

I  have  pleasure  in  introducing  to  you  your  Chairman  for  the 
day,  Mr.  William  McCarroll.  (Applause.) 

MR.  MCCARROLL  :  Mr.  President  and  Gentlemen  of  the  Con- 
ference :  It  is  not  my  intention,  nor  is  it  my  province  as  Chairman, 
to  do  more  than  say  a  few  words  in  expression  of  my  apprecia- 
tion of  the  honor  of  presiding  over  some  of  the  sessions  of  this 
most  important  conference.  It  is  an  international  trade  con- 
ference and  one  of  the  things  I  have  noticed  as  most  prominent  in 
all  the  meetings  that  I  have  had  the  privilege  of  attending  has 
been  the  spirit  of  internationalism;  because  there  is  such  a  thing 
as  a  spirit  of  internationalism. 

I  well  remember — if  I  may  be  pardoned  a  personal  word- 
when  I  was  first  engaged  in  undertaking  to  promote  the  foreign 
trade  of  the  house  with  which  I  was  at  that  time  in  business.  In 
talking  with  a  merchant  or  a  banker  in  London,  Paris,  Amster- 
dam, Bremen,  Hamburg  or  in  Berlin  I  found  that  they  had  in  all 
those  places  an  international  spirit,  so  that  when  they  spoke  of 
any  country  such  as  we  call  a  foreign  country,  a  country  abroad ; 
they  spoke  of  it  as  if  it  were  a  contiguous  territory,  almost  the 
same  as  we  would  speak  of  one  of  our  States,  and  with  the  same 
familiarity.  That  is  something  for  which  the  American  merchant 
has  not  been  distinguished  until  recent  times.  Now  we  are 
getting  some  of  that  spirit  of  internationalism  in  trade.  It  has 
as  a  basis  and  also  as  a  growth,  a  spirit  of  fraternalism,  which  is 
the  foundation  of  all  relations  between  business  men  and  between 
men  the  world  over ;  and  in  the  interest  of  the  extension  of  which 
we  are  met  here  in  this  trade  conference. 

Gentlemen,  without  taking  more  of  your  time,  we  will  pro- 
ceed with  our  program,  because  I  am  admonished  that  the  pic- 
tures having  moved,  the  business  of  this  conference  should  also 
move. 

As  the  first  speaker  I  have  great  pleasure  in  introducing  to 
you  Mr.  Rossati,  commercial  attache  of  the  Italian  Consulate, 
New  York,  who  will  speak  to  us  with  respect  to  the  commercial 
world  in  Italy.  (Applause.) 

Address  of  Mr.  Guido  Rossati 

MR.  ROSSATI  :  Honorable  chairman,  ladies  and  gentlemen  of 
the  Conference :  It  is  a  pleasing  duty  for  me,  that  of  conveying  to 

365' 


Sixth  Session — Wednesday  Morning 


this  Conference  the  assurance  of  the  interest  taken  in  it  by  the 
Consul-General  of  Italy  in  this  city,  who  has  greatly  appreciated 
and  is  thankful  for  your  kind  invitation,  aware,  as  he  is,  of  the 
far-reaching  importance  of  the  subjects  discussed  here.  Re- 
gretting his  inability  to  be  present,  he  has  honored  me  with  the 
request  to  attend  in  his  place — a  meager  substitute,  I  am  afraid, 
but  none  the  less  sincere  in  congratulating  you  on  the  success 
and  fruitfulness  of  your  labors. 

That  Italy  has,  since  current  events,  awakened  renewed  inter- 
est in  the  United  States  not  only  as  a  world  power  entitled  to 
respect  and  consideration,  not  only  as  the  land  of  traditional 
artistic  excellence  and  enduring  genius,  but  also  as  a  field  for  com- 
mercial possibilities,  is  daily  becoming  more  evident. 

Until  recently  little  was  known  to  the  ordinary  American 
about  the  commerce  between  the  two  countries.  That  Italy  used 
to  send  to  these  hospitable  shores  a  yearly  contingent  of  about 
200,000  able-bodied  immigrants ;  that  her  trade  with  this  country 
represented  about  3  per  cent,  of  the  total  foreign  commerce  of 
the  United  States ;  that  she  supplied  us  with  such  commodities  as 
silk,  fruit,  certain  lines  of  food  products,  and  certain  raw  ma- 
terials necessary  to  the  chemical  and  building  industries,  ex- 
changing these  exports  for  cotton,  grain,  tobacco  and  lumber, 
naval  stores,  animal  products,  mineral  and  vegetable  oils,  copper 
and  other  raw  materials  and  agricultural  and  specialized  machin- 
ery, was  all  that  was  generally  known  of  her  commerce  with  this 
nation,  and  little  thought  was  given  to  its  development. 

Although  this  Association  had  its  representatives  promoting 
the  interests  of  social  intercourse  with  foreign  nations  and  had 
time  and  again  called  the  attention  of  American  manufacturers 
and  merchants  to  the  possibilities  of  trade  with  Italy,  the  full 
extent  of  those  possibilities  was  not  generally  appreciated  or 
known. 

I  remember  attending  for  this  purpose  some  years  ago  a 
meeting  held  in  the  offices  of  your  Association,  when  I  had  the 
honor  of  meeting  and  the  pleasure  of  listening  to  a  very  interest- 
ing report  of  the  then  United  States  Consul  at  Milano  on  trade 
conditions  in  Italy.  It  has  only  been  since  the  outbreak  of  the 
war  in  Europe,  however,  that  the  increase  in  the  exports  to  Italy, 
with  the  remarkable  balance  in  favor  of  the  United  States  from 
$18,000,000  in  the  fiscal  year  1914  to  $130,000,000  in  1915, 
brought  about  by  the  new  conditions  of  the  war,  has  drawn  to 
Italy  and  its  economic  possibilities  the  attention  of  American 

366 


Italy — Italian  Commercial  Attack^ 


business  men.  It  may  here  be  stated  that  this  increase  is  not 
entirely  due  to  war  orders,  but  in  no  small  part  to  purchases  here 
of  goods  formerly  obtained  in  European  markets. 

The  fact  should  not  be  overlooked  that  trade  between  this 
country  and  Europe  has  developed  almost  concomitantly  with 
an  almost  even  balance  between  the  two  countries,  up  to  ten 
years  ago  when  the  trade  balance  began  to  be  in  favor  of  the 
United  States,  notwithstanding  the  great  stimulus  that  imports 
from  Italy  received,  due  in  part  to  the  enormous  Italian  immigra- 
tion and  to  the  marvelous  industrial  development  of  this  country. 

To  maintain  permanently  this  trade  is  a  matter  deserving 
of  earnest  consideration.  It  is  necessary,  however,  that  imports 
from  Italy  should  also  be  developed,  as  they  amount  to  only  about 
one-quarter  of  the  exports,  which  has  resulted  in  the  present  dis- 
parity in  the  Italian  exchange. 

It  is  well  established  in  economics  that  in  order  to  sell  to  a 
country  you  must  be  willing  to  buy  from  that  country.  America 
must,  therefore,  increase  the  purchases  from  Italy  if  she  intends 
to  cultivate  the  foreign  trade. 

Little  attempt  has  so  far  been  made  by  Italian  manufacturers 
and  merchants  to  employ  efficient  commercial  organization  and 
cooperation  to  extend  to  the  utmost  the  market  for  Italian  products 
in  this  country,  and  in  lines  other  than  food  products  or  raw 
and  semi-raw  materials. 

Little  doubt  exists,  on  the  other  hand,  that  the  volume  and 
variety  of  Italian  trade,  by  more  systematic  endeavor  could  be 
largely  developed,  not  only  in  lines  in  which  Italy  has  already 
realized  an  established  reputation  for  excellence,  but  also  in  new 
lines,  and  especially  in  commodities  where  the  value  of  workman- 
ship is  no  small  factor. 

Italy's  Commercial  Progress 

Italy's  record  for  the  last  thirty  years,  during  which  her 
exports  to  this  country  have  more  than  trebled,  is  one  of  notable 
economic  achievement,  due  to  the  industriousness,  thriftiness,  fru- 
gality and  progressiveness  of  her  people,  who  have  proven  their 
ability  to  work  constructively  for  the  future  as  they  have  in  the 
past.  Its  affairs  well  administered,  Italy  has  shown  continuous 
increases  in  population,  wealth  and  education,  extraordinary  gains 
in  commerce  and  industry,  and  a  strong  and  steadily  improving 
national  credit.  Sound  finance  and  a  steady  national  credit  are 
elements  of  paramount  importance  in  the  economic  life  of  modern 

367 


Sixth  Session — Wednesday  Morning 


nations.  Over  40  per  cent,  of  her  public  debt  has  been  incurred 
for  productive  work,  such  as  the  construction  of  canals,  railroads, 
telegraphs  and  telephones,  harbors,  drainage  and  the  betterment 
of  land. 

The  total  savings  deposits  of  one  billion,  one  hundred  and 
sixty-three  million,  which,  during  the  last  thirty  years  have  in- 
creased five  times,  the  doubling  of  the  total  foreign  trade  of  the 
country  during  the  last  decade  and  now  totaling  one  billion,  one 
hundred  sixty-five  millions,  of  which  one  hundred  and  thirty-five 
millions  represents  the  exports  of  the  United  States  to  Italy  and 
fifty-five  millions  the  imports  of  Italy  into  the  United  States,  dem- 
onstrate that  Italy  has  the  economic  force  to  respond  to  a  greater 
trade  extension,  more  adequate  to  her  position  as  the  highway  in 
Mediterranean  commerce,  especially  between  the  Orient  and 
western  Europe,  to  her  traditions,  identifying  her  with  the  high 
commercial  and  financial  eminence  attained  by  the  medieval  com- 
monwealths of  Genoa  and  Venice,  of  Pisa,  of  Florence  and  Lom- 
bardy,  to  her  intrinsic  and  varied  resources,  to  the  abundance 
and  cheapness  of  labor,  giving  her  a  remarkable  advantage  in 
valorizing  merchandise  from  the  raw  state  to  the  finished  product, 
and  to  the  numerous  emigration,  which  is  no  small  factor  in  trade 
extension. 

The  economic  development  of  Italy  has  so  far  suffered  no 
setback  on  account  of  recent  events  which  seemed,  on  the  con- 
trary, to  have  brought  the  country  to  a  better  realization  of  its 
potentiality  and  to  have  stimulated  a  greater  determination  to 
exploit  its  economic  possibilities  with  renewed  energy. 
Italy  Needs  Labor-saving  Devices 

Now  that  the  country  is  freed  from  the  dependence  that 
has  characterized  her  financial  system  in  the  past  and  has 
awakened  to  the  consciousness  of  possessing  those  positive  and 
permanent  elements  which  enable  her  to  look  with  confidence  to 
the  future,  she  can  proceed  untrammeled  to  organize  her  pro- 
duction on  the  basis  of  a  maximum  yield  with  a  minimum  cost. 
In  this  expansion  Italy  will  need  labor  saving  machinery,  as  the 
cost  of  labor  is  steadily  increasing. 

Although  Italy  has  to  import  the  coal  she  needs,  this  is  un- 
likely to  prove  a  hindrance,  as  this  need  can  be  supplemented  by 
hydro-electric  energy,  of  which  the  country  is  capable  of  develop- 
ing an  abundant  supply,  and  which,  by  developing  a  demand  for 
electrical  machinery  of  all  kinds  and  by  permitting  a  better  valori- 
zation of  labor  should  benefit  this  country. 

368 


Italy — Italian  Commercial  Attach^ 


One  of  the  most  likely  features  of  the  readjustment  of  mat- 
ters coming  in  Europe  will  be  a  very  different  orientation  in  the 
fiscal  regimes  from  those  formerly  obtaining,  namely,  a  different 
economic  system  in  harmony  with  the  new  political  situation  that 
will  issue  from  the  present  conflict. 

New  Problems  Will  Confront  European  Commerce 

The  industry  and  commerce  of  the  nations  of  Europe  will 
be  confronted  in  the  near  future  with  new  problems.  Economic 
interests  and  fiscal  regimes  will  probably  group  themselves  into 
divisions  which  seem  marked  along  the  lines  of  existent  political 
coalition.  The  economic  regime  of  Italy,  by  reason  of  this  in- 
evitable change,  will  gain  greater  liberty  and  elasticity,  which  will 
thus  afford  ampler  opportunity  for  arriving  at  some  commercial 
arrangement  with  the  United  States  of  greater  reciprocal  ad- 
vantage. 

In  contemporary  civilization  nations  need  one  another  and 
each  nation  may  yet  enlarge  her  sphere  of  independence. 

Each  nation  can  be  stronger  and  increase,  in  the  web  of  inter- 
national cooperation,  the  measure  of  her  independence. 

Italy  has  sensed  her  opportunities.  She  needs  cotton,  grain, 
animal  products,  tobacco,  mineral  and  vegetable  oils,  lumber,  fer- 
tilizers, coal,  machinery — all  products  these  in  which  the  United 
States  plays  such  a  dominant  role  in  the  international  market  that 
her  commercial  and  fiscal  policy  will  have  a  decisive  influence 
in  the  prosperity  of  her  friends,  or  mark  the  decadence  of  any 
nation  which  antagonizes  her. 

I  cannot  help  noting  as  one  of  the  most  satisfactory  features 
of  commercial  intercourse  between  the  United  States  and  Italy 
the  fact  that  American  exports  to  Italy  are  chiefly  represented  by 
materials  or  articles  necessary  to  industrial  activity. 

The  development  of  this  trade  is,  therefore,  closely  identified 
with  the  increase  of  prosperity  in  the  country  of  destination,  of 
which  the  measure  of  such  export  furnishes  a  reliable  index. 

In  exchange  Italy  wants  to  sell  to  this  country  more  of  its 
special  lines  of  agricultural  and  food  products,  of  its  silk  and 
textile  materials,  of  its  tropical  fruits,  of  its  olive  oil,  of  its  artistic 
productions.  This  can  be  accomplished  without  fear  of  repeating 
in  the  case  of  this  country  the  unwelcome  experience  of  political 
intrigue  or  industrial  dominance. 

Credit  and  Banking  Facilities  Needed 

Credit  and  banking  facilities  must  be  provided  in  the  up- 
building of  a  more  extensive  commerce.  Capital  and  credit  are 

369 


Sixth  Session — Wednesday  Morning 


as  essential  as  raw  materials  and  products  to  the  progress,  in- 
dividual and  national,  of  peoples. 

The  bank  is  nowadays  the  propelling  factor  in  the  pros- 
perity of  nations,  and  credit  and  banking  must  possess  the  elas- 
ticity of  adaptation  to  the  conditions  of  the  environment  in  which 
they  operate. 

Long  established  usages  arising  from  peculiar  local  condi- 
tions and  associated  even  with  the  most  conservative  business  in 
Italy  and  elsewhere  in  Europe  require  credit  extension,  to  which 
the  American  exporters,  practically  accustomed  to  a  cash  busi- 
ness, are  amenable  with  difficulty,  but  which  is  imperative  in  order 
to  secure  the  business,  and  which  should  not  act  as  a  deterrent  nor 
restrict  the  scope  of  activities,  provided  the  proper  organization 
for  the  control  of  credit  and  the  proper  facilities  for  the  exten- 
sion of  credit  be  furnished. 

This  necessity  has  become  all  the  more  manifest  since  the 
international  financial  center  has  come  to  New  York,  and  since 
the  dollar  has  practically  become  the  basis  for  the  world's  mone- 
tary exchange. 

Credit  facilities  ^  through  the  opening  by  some  important 
American  bank  of  branches  in  Italy  would  have  a  beneficial  effect 
in  reducing  the  present  high  rate  of  exchange  which  operates 
unfavorably  on  the  development  of  commerce. 

Foreign  trade  is  an  indispensable  factor  in  the  life  of  any 
nation.  A  country  favored  by  an  active  movement  in  the  im- 
ports and  exports  grows  rich  and  prospers.  On  the  other  hand, 
a  country  handicapped  in  its  foreign  commerce  becomes  impover- 
ished and  declines. 

As  the  highest  aspirations  in  the  field  of  human  progress  and 
betterment  turn  to  America  as  if  awaiting  from  her  the  dawn  of 
a  new  life  to  guide  the  future  and  better  destinies  of  the  human 
race,  is  it  to  be  wondered  at  that  to  the  United  States,  which  is 
using  the  riches  and  power  vouchsafed  to  it  by  Divine  Provi- 
dence toward  moral  greatness  in  comparison  to  which  material 
wealth  is  but  a  vain  shadow — is  it  to  be  wondered  at  that  nations 
which  share  these  ideals  and  aspirations  should  turn  to  the  United 
States  like  unto  a  brother  in  their  desire  to  cement  closer  rela- 
tions ? 

This  opportunity  in  the  case  of  Italy  is  now  presenting  it- 
self more  manifestly  than  ever  before;  but  in  order  to  translate 
this  desirable  end  into  the  realm  of  facts  it  should  be  borne  in 
mind  that  trade  which  is  not  wholly  equalized,  or  which  is  nearly 

370 


Australia — Percy  Roderick  McLean 


altogether  one-sided,  is  seldom  quite  satisfactory,  and  that  such 
trade  is  always  destitute  of  the  element  of  stability  which  re- 
sults only  from  the  equipoise  of  imports  and  exports.  (Great 
applause.) 

THE  CHAIRMAN  :  I  am  sure  that  we  all  cordially  reciprocate 
the  sentiments  that  have  been  expressed  by  the  Commercial 
Attache  of  Italy. 

Those  of  us  who  had  the  opportunity  of  hearing  the  ex- 
cellent paper  of  Mr.  Quinn  regarding  the  opportunities  and  pros- 
pects for  business  with  Australia,  which  he  read  on  Monday, 
will,  I  know,  look  forward  to  hearing  from  the  next  speaker, 
Mr.  Percy  McLean,  director  of  Frazer  &  Best,  of  Sydney,  a 
firm  which  has  close  relations  with  prominent  business  interests  in 
the  United  States.  Mr.  McLean  comes  to  perfect  closer  relations 
between  the  business  interests  of  the  United  States  and  those  of 
the  Australian  Continent. 

With  great  pleasure  I  introduce  Mr.  McLean.    (Applause.) 

Address  of  Mr.  Percy  Roderick  McLean 

MR.  MCLEAN  :  Mr.  Chairman  and  Members  of  the  Confer- 
ence :  It  is  with  a  great  deal  of  pleasure  that  I  appear  before  you 
today  after  listening  to  the  eminent  speakers  and  the  wonderful 
discussion  and  speeches  that  have  been  presented  to  you  during 
the  last  few  days. 

It  is  most  impressive  for  one  from  Australia  to  listen  to  the 
possibilities  of  the  extension  of  the  export  trade  of  America. 
For  many  years  we  have  done  a  considerable  business  with  the 
United  States  of  America,  but  it  has  not  been  as  extensive  as 
it  should  be,  for  the  reason  that  the  American  manufacturers 
have  been  too  independent  in  regard  to  manufacturing  lines  exact- 
ly suitable  for  that  market,  and  I  am  very,  very  gratified  to 
see  that  there  are  possibilities  that  that  phase  of  the  matter  will 
receive  better  attention  in  the  course  of  a  few  months.  I  shall 
go  back  to  Australia  much  more  reassured  that  America  will  be 
doing  a  larger  business  with  Australia  and  that  particular  part  of 
the  world  than  it  has  been  doing  in  the  past. 
A  Contrast  in  Policies 

I  wanted  to  say  this,  that  the  German  manufacturers  have 
done  a  very  large  business  in  Australia  for  the  reason  that  they 
went  about  the  business-getting  in  a  systematic  manner.  They 
sent  representatives  from  the  factories  in  Germany  for  the  pur- 

371 


Sixth  Session — Wednesday  Morning 


pose  of  looking  over  the  market  and  becoming  acquainted  with 
the  conditions,  and  the  result  was  that  when  they  returned  to 
Germany  the  factories  went  to  the  expense  of  making  tools  and 
dies  and  special  machinery  to  prepare  samples  which  were  sent 
to  Australia  free  of  charge;  and  naturally  that  meant  that  the 
people  became  more  interested  because  they  were  getting  the 
lines  of  manufacture  which  they  required. 

The  American  manufacturer's  policy  has  been  to  sell  lines  in 
Australia  which  have  been  in  big  demand  in  America  and  manu- 
factured under  the  wonderful  efficiency  that  the  factories  show 
here,  and  the  result  is  that  the  American  people  and  factories  do 
not  appreciate  the  extent  of  the  Australian  market  because  they 
have  not  investigated  it.  We  have  had  very  few  manufacturers' 
representatives  out  in  Australia  from  this  country  in  the  last 
five  years,  and  I  hope  that  in  the  next  year  or  two  the  manu- 
facturers will  see  their  way  clear  to  send  representatives  there  to 
investigate  the  situation ;  because  I  can  assure  you  there  is  a  very 
big  possibility  to  the  American  manufacturer  today,  the  market 
today  is  free  of  all  competition,  and  manufacturers  can  very 
easily  get  in  and  make  a  very  big  business  connection  in  Aus- 
talia  in  particular. 

It  has  been  surprising  to  me  to  notice,  in  discussion  with 
American  manufacturers,  the  ignorance  that  sometimes  exists 
with  regard  to  the  location  of  Australia  and  its  proportions. 

One  manufacturer  in  the  West  asked  me  if  Australia  was  in 
Tasmania.  (Laughter.)  I  had  to  assure  him  that  such  was  not 
the  case,  and  went  to  the  trouble  to  show  him  a  map. 

Then,  another  man  asked  me  if  we  were  all  white  people 
(laughter),  and  if  we  spoke  the  English  language.  (Laughter.) 
Strangely  enough,  another  man  said  he  thought  we  were  at  war 
with  England.  (Great  laughter.) 

It  seems  to  me,  therefore,  that  we  want  to  get  an  advertising 
scheme  to  make  the  people  know  more  about  Australia. 

I  listened  with  great  interest  to  Mr.  Quinn's  speech  the 
other  day  and  the  details  that  he  gave  in  connection  with  the 
business  that  had  been  done  with  America;  but  I  honestly  think 
that  it  is  in  its  infancy,  and  if  the  manufacturers  are  satisfied 
to  cater  properly  to  that  market  a  very  extensive  business  will 

be  built  up. 

The  Shipping  Question 

Unfortunatey  the  shipping  question  is  going  to  affect  Aus- 
tralian conditions  for  a  little  while,  I  think,  but  I  think  the 

372 


Australia — Percy  Roderick  McLean 


general  situation  is  so  serious  that  it  will  mend  itself  in  the  course 
of  a  few  months ;  because  it  is  not  only  affecting  that  part  of 
the  world,  but  it  is  affecting  the  manufacturers  in  their  exporting 
to  other  parts  of  the  world,  and  I  hope  that  that  matter  of  ship- 
ping will  soon  be  remedied. 

You  may  be  interested  to  know  that  it  takes  about  six  to 
eight  weeks  for  a  tramp  steamer  to  go  from  New  York  to  Aus- 
tralia, to  Sydney;  but  we  have  on  an  average  of  three  to  four 
mails  a  month  from  America  and  three  or  four  mails  a  month 
from  Australia  up  to  the  last  three  or  four  months,  so  that  you 
see  we  are  in  rather  good  touch  with  this  part  of  the  world.  It 
is  just  about  the  same  distance  in  mail  service  as  from  Great 
Britain. 

We,  of  course,  have  always  done  a  big  business  with  Great 
Britain  and  France  and  Germany  and  Austria,  but,  of  course, 
those  people  are  too  busily  engaged  in  other  matters  now  to  think 
of  manufacturing  for  export;  and  I  can  assure  you,  gentlemen, 
that  there  are  wonderful  possibilities  down  there,  and  I  ask  you 
to  take  the  first  opportunity  to  investigate  the  matter.  I  shall 
be  very  pleased,  myself,  to  give  any  information  in  connection 
with  the  Australian  situation  in  the  lobby,  if  any  manufacturers 
wish  me  to  do  so;  and  I  hope  that  much  benefit  will  result. 

I  want  to  congratulate  the  National  Association  of  Manu- 
facturers on  the  extensive  work  that  has  been  covered  by  this 
Conference  and  to  express  my  gratitude  for  my  presence  here 
to  listen  to  the  discussions. 

In  conclusion,  I  would  like  to  say  that  I  thank  you  very  much 
for  the  courtesy  which  you  have  extended  in  listening  to  my  little 
talk,  and  I  trust  it  will  have  the  desired  effect  of  still  further 
cementing  the  business  and  commercial  relationship  between  Aus- 
tralia and  America.  I  thank  you,  gentlemen.  (Applause.) 


THE  CHAIRMAN  :  I  do  not  know  what  part  of  the  country 
Mr.  McLean  has  been  traveling  in,  but  I  would  like  to  assure  him 
that  the  ignorance  of  which  he  has  spoken  is  not  so  prevalent 
as  he  supposes,  or  as  he  has  been  led  to  believe.  I  think  the 
instances  which  he  mentioned  are  rather  exceptional.  However, 
I  am  sure  that  the  interest  of  our  business  men  and  those  par- 
ticularly who  are  here  will  be  stimulated  in  the  part  of  the 
world  from  which  Mr.  McLean  has  come;  and  the  object  of 
this  Conference  is  to  do  just  that  thing — to  arouse  the  interest 

373 


Sixth  Session — Wednesday  Morning 


of  our  business  men ;  and  I  believe  the  result  of  it  will  be  success- 
ful in  the  different  countries  which  are  the  topics  of  our  dis- 
cussion. 

We  are  fortunate  in  having  with  us  Lieutenant  J.  J.  Simons, 
of  Perth,  Australia,  who  is  in  charge  of  a  cadet  corps  making 
an  industrial  tour  or  educational  tour  of  the  industries  of  this 
country,  and  we  invite  Lieutenant  Simons  to  address  us  for  a 
few  moments. 

I  take  pleasure  in  introducing  Lieutenant  Simons. 
(Applause.) 

Address  of  Lieutenant  J.  J.  Simons 

LIEUTENANT  SIMONS  :  Mr.  Chairman,  your  Excellencies  and 
gentlemen:  This  is  a  great  privilege  to  have  the  opportunity  of 
meeting  so  many  of  the  trade  representatives  which  it  is  our 
good  fortune  to  see  assembled  in  the  City  of  New  York. 

The  previous  speaker  remarked  that  he  comes  from  Sydney 
right  on  the  eastern  side  of  the  Australian  seaboard.  It  is  our 
good  fortune  to  come  right  from  the  opposite  end  of  the  Australian 
continent.  We  live  in  Perth,  which  is  as  far  away  from  Sydney 
as  New  York  is  from  San  Francisco.  We  especially  emphasize 
the  distance  because  of  the  fact  that  some  of  the  newspapers  here 
have  referred  to  us  as  coming  from  an  island,  and  have  referred 
to  our  boys  as  "islanders."  (Laughter.) 

When  we  remember  that  the  whole  forty-eight  States  of  the 
American  Union  could  be  placed  inside  of  the  Australian  con- 
tinent and  there  would  still  be  six  hundred  square  miles  of  terri- 
tory left  over  for  the  real  estate  men,  you  can  understand  how 
queerly  it  strikes  us  to  be  called  "islanders."  (Laughter.) 

And  when  I  tell  you  that  that  country  is  as  prolific  as  Cali- 
fornia, that  is  about  the  best  comparison  I  can  give  you.  The 
climate  is  more  like  the  California  pattern  than  any  we  have 
ever  seen.  In  fact,  we  believe  that  Nature  took  Australia  and 
improved  her  climate  after  making  that  of  California.  (Laugh- 
ter.) 

You  will  also  remember  that  everything  which  is  produced 
and  enjoyed  by  the  human  being  is  possible  of  production  in  the 
varied  climatic  conditions  from  the  north  to  the  south  of 
Australia. 

In  the  state  where  we  come  from,  alone,  there  is  one  single 
square  mile  of  country  which  yields  every  year  thirty-five  million 
dollars'  worth  of  gold — just  one  square  mile;  and  that  is  in  the 

374 


Australia — Lieutenant  Simons 


territory  of  one  state  of  a  million  square  miles,  with  a  popula- 
tion of  only  three  hundred  and  twenty  thousand  people,  and  when 
we  remember  that  our  whole  population,  for  the  nation  of  Aus- 
tralia, is  but  five  million  people,  and  remember  the  tremendous 
possibilities  ahead,  I  am  sure  you  will  recognize  that  Australia, 
above  all  countries  in  the  world,  offers  a  field  for  the  profitable 
exchange  of  trade. 

Americans  Not  "Foreigners"  in  Australia 

We  believe  the  greatest  factor  in  successful  trading,  the 
greatest  factor  for  the  man  who  is  going  out  to  sell,  is  to  be  as- 
sured that  he  has  the  good  will  of  the  prospective  buyer  to  begin 
with;  and  there  is  no  country  outside  of  the  United  States  itself 
where  the  United  States  citizen  is  more  at  home  than  he  is  in 
Australia.  We  have  never  heard  an  American  called  a  foreigner 
in  our  country.  If  a  newspaper  is  describing  a  great  gathering 
where  different  kinds  of  people  are  represented,  you  will  very 
often  see  the  phrase  used  that  there  were  present  a  number  of 
Americans  and  some  foreigners.  (Laughter  and  applause.) 

But  the  word  "foreigner,"  as  the  other  representatives  from 
my  country  will  tell  you,  is  never  used  as  applying  to  Americans  ; 
and  on  every  occasion  when  American  citizens  have  come  to  our 
country  they  have  been  treated  as  ourselves;  and  it  is  right  that 
it  should  be  so,  because  our  relationship  is  so  much  intertwined, 
in  fact  our  relationship  we  might  say  is  indissoluble,  because  of 
the  fact  that  the  great  Pacific  ocean  is  the  common  heritage  of 
the  people  of  America  on  one  side  and  the  people  of  Australia 
on  the  other. 

Sentiment  and  Commercial  Interest 

So  the  good-will  of  our  people  is  not  only  sentimental  but 
also  has  a  great  foundation  of  commercial  interest.  We,  just 
for  a  moment,  wish  to  emphasize  the  great  part  Australia  must 
play  in  the  future.  We  believe  it  is  going  to  be  the  pivot  point 
for  the  greatest  human  activities  of  this  century.  Last  night, 
during  the  very  excellent  set  of  speeches  at  the  banquet,  many  re- 
marks were  made  regarding  the  origin  of  exchange  and  the 
growth  of  commerce,  and  if  we  review,  just  for  a  moment,  the 
influence  of  history,  we  shall  see  that  for  many  centuries  the  great 
ocean,  not  only  of  commerce  but  for  great  feats  of  physical 
4  strength  between  the  nations,  was  the  Mediterranean.  Then  the 
arena  of  activity  shifted,  and  the  Atlantic  ocean  for  about  three 
centuries  became  the  great  ocean,  holding  the  place  of  pride  as 

375 


Sixth  Session — Wednesday  Morning 


the  great  arena  for  commercial  and  maritime  activity.  The 
signs  are  many,  however,  which  show  us  that  the  great  ocean 
of  the  future,  the  great  ocean  of  destiny,  is  the  Pacific.  There 
is  a  new  world  awakening  there,  the  world  of  the  Orient,  and  the 
pivot  point  of  that  future  activity  is  the  Australian  common- 
wealth. That  is  why  we  feel  that  the  American  manufacturers 
and  the  American  traders  must  have  a  more  intelligent  grasp  of 
the  possibilities  of  our  country  and  exploit  those  possibilities  if 
we  are  going  to  build  up  those  trade  connections  which  our  hearts 
lead  us  to  believe  are  for  the  benefit  of  both. 

Mr.  McLean  caused  a  laugh  when  he  told  you  of  his  experi- 
ence regarding  the  lack  of  knowledge  of  Australia  among  certain 
people  he  had  met  in  this  country.  I  met  a  man  in  the  Western 
part  of  America  who  guessed  that  Australia  was  about  the  size 
of  the  State  of  Illinois.  (Laughter.)  And  he  was  a  business 
man  in  a  very  large  city,  but  was  not  doing  any  export  trade. 

I  have  been  asked  to  sign  my  name  in  an  autograph  album 
in  my  native  language.  (Laughter.) 

My  boys  have  been  asked,  by  an  American  lady,  if  they 
will  not  feel  awkward  when  they  get  back  into  their  native  cos- 
tumes again  (laughter),  the  assumption  being  that  we  have 
just  put  on  this  European  clothing  to  appear  respectable  in  the 
eyes  of  the  American  people.  (Laughter.) 

That  will  all  give  you  some  idea  of  what  there  is  to  do  to 
break  down  these  barriers  of  misunderstanding  in  order  that 
an  intelligent  trade  exchange  may  take  place. 

Of  course,  the  productiveness  of  Australia  in  regard  to  wool 
is  too  well  known  to  you  to  need  reiteration.  We  have  some- 
thing like  one  hundred  million  sheep  to  start  with,  and  if  to- 
morrow morning,  in  a  spasm  of  generosity,  we  decided  to  divide 
our  sheep  flocks  among  the  American  people,  you  would  all  be 
the  possessor  of  one  sheep — every  man,  woman  and  child  in  the 
country  would  own  an  Australian  sheep,  if  we  distributed  our 
flocks  among  the  population  of  this  country.  Our  wool  pro- 
duction is  somewhere  near  eight  hundred  millions  a  year,  and, 
as  you  say  here,  "That  is  some" — I  don't  know  just  how  you 
do  use  that  word  "some"  over  here — but  I  think  you  would  say 
"some  wool  crop."  (Laughter.) 

The  Same  Language  "With  Variations" 

In  our  country,  if  you  came  out  and  said  "some  sheep," 
that  would  mean  probably  a  hundred  sheep,  but  over  here  it 

376 


Australia — Lieutenant  Simons 


would  only  mean  one  good  first-class  sheep,  if  you  said  it  was 
"some"  sheep.  (Laughter.) 

We  get  mixed  up  sometimes,  on  account  of  these  little  differ- 
ences in  expression — I  don't  know  whether  I  have  made  any 
mistakes  during  the  time  I  have  been  talking  or  not.  I  said  in  the 
beginning  that  our  language  is  the  same.  It  is  the  same,  with 
variations.  (Laughter.)  But  since  I  have  been  in  this  country  I 
have  learned  an  awful  lot  of  new  ideas  about  speaking  English. 
(Laughter.) 

I  met  an  American  lady  in  California,  and  I  started  to  study 
natural  history.  I  like  natural  history,  and  so  I  saw  this  lady 
and  she  was  in  Mills  College,  a  very  classical  institution  in  Cali- 
fornia, and  I  started  talking  about  the  bears.  I  said:  "Have 
you  got  any  grizzly  bears  ?"  She  replied,  "Oh,  yes ;  we  have  got 
a  lot  of  grizzly  bears/*  I  said,  "Do  you  have  any  butterflies?" 
And  she  replied,  "Sure,  we  have  butterflies;  of  course."  I  then 
said,  "Do  you  have  any  fleas?"  And  she  said,  "Search  me." 
(Great  laughter.)  I  have  a  lot  of  boys  with  me  to  set  an  ex- 
ample to,  and  I  don't  know  yet  whether  there  are  any  fleas  in 
California  or  not.  (Laughter.)  I  made  no  effort  to  follow  the 
line  of  proof  which  she  suggested. 

Of  course,  that  is  only  one  of  the  many  instances.  I  am 
very  much  interested  in  the  skunk.  We  do  not  have  any  skunks 
in  Australia.  All  our  animals  are  respectable.  (Laughter.)  As 
a  schoolboy  I  had  read  about  the  skunk,  and  naturally  I  developed 
a  lively  curiosity  to  see  what  one  looked  like.  We  were  going 
along  in  an  automobile  near  Bakersfield,  California,  and  I  said 
to  a  man  who  was  sitting  beside  me,  who  came  from  Chicago — 
we  used  to  say,  C-h-i-c-a-g-o  before  we  left  Australia,  but  we 
now  find  out  that  we  must  say  "C-h-i-c-a-w-g-o" — this  man  was 
from  Chicago,  and  I  asked  him  whether  there  were  any  skunks 
around  there.  And  he  said,  "That  is  one  on  me."  (Laughter.) 
I  didn't  notice  any  (laughter),  but  the  military  instinct  asserted 
itself,  and  as  a  precautionary  measure  I  got  as  far  as  possible 
toward  the  other  side  of  the  machine.  (Laughter.)  I  have 
come  to  the  one  conclusion  that  natural  history  as  taught  in  the 
Australian  schools  is  just  as  wide  of  the  mark  as  the  things 
taught  about  Australia  in  America,  because,  if  that  man  was 
telling  me  the  truth,  and  I  have  no  doubt  he  was,  and  our  natural 
history  was  correct,  it  would  not  have  been  possible  for  him  to 
have  that  skunk  on  him  without  my  knowing  it.  (Laughter.) 

377 


Sixth  Session — Wednesday  Morning 


The  worst  knock  of  all,  however,  was  this — you  will  excuse 
me  for  taking  up  your  time  in  relating  this  to  you,  because  I  am 
only  doing  it  out  of  a  feeling  of  nervousness,  feeling  that  perhaps 
I  have  made  some  mistakes  here  in  speaking — I  don't  know 
whether  I  have  or  not,  but  there  was  a  mayor  of  one  of  the  lead- 
ing cities  in  the  State  of  California  who  had  been  very  kind  to 
us ;  I  felt  that  I  had  to  express  my  gratitude  to  him  in  a  superlative 
way,  and  so  I  put  it  just  as  I  would  have  expressed  it  in  Australia. 
I  just  slapped  him  on  the  shoulder,  and  shook  hands  with  him 
and  said : 

"Mr.  Mayor,  I  can't  tell  you  how  much  we  owe  to  you  for 
what  you  have  done  for  us.  You  have  done  an  awful  lot  for  us. 
In  fact,  of  all  the  mayors  I  have  met,  and  I  have  met  about 
fifty,  I  think  you  are  the  greatest  grafter  of  them  all.  (Laughter.) 

He  did  not  show  any  desire  to  continue  the  friendly  re- 
lationship. In  fact,  he  almost  cut  off  negotiations.  So  I  said  to 
him  a  minute  or  two  afterwards : 

"Excuse  me,  Mr.  Mayor.    Have  I  said  anything  wrong?" 

"Well,"  he  said,  "I  didn't  quite  like  that  one  you  put  over 
about  my  being  a  grafter." 

I  said,  "What's  wrong  with  that?" 

So  he  explained  to  me  what  the  American  meaning  of  the 
word  "grafter"  is.  In  our  country  to  say  that  a  man  is  a  grafter 
is  to  say  that  he  is  a  hard-working,  conscientious,  plain-talking 
fellow,  one  that  works  hard  and  does  his  work  well,  such  a  man  as, 
if  he  were  expected  to  work  eight  hours,  would  cheerfully  do  ten 
hours'  work  without  any  extra  payment.  That  is  the  meaning 
of  the  word  "grafter"  in  our  country.  (Laughter.)  The  Ameri- 
can idea  is  altogether  different.  (Laughter.) 

The  Purchasing  Power  of  Australia 

Just  in  conclusion  I  would  like  to  emphasize  the  great  desire 
we  have  in  Australia  to  build  up  connections  with  the  United 
States.  We  have  had  trade  relations  with  a  great  many  people, 
but  none  of  them  have  been  more  satisfactory  than  those  we  have 
had  with  the  United  States;  and  just  to  think  of  the  great  possi- 
bilities, you  must  bear  in  mind  the  size  of  the  country  and  you 
must  remember  that  one  city,  Sydney,  alone,  is  the  largest  of  any 
city  in  the  British  Empire  outside  of  the  motherland  itself,  hav- 
ing a  population  of  eight  hundred  thousand,  which  is  much  larger 
than  any  city  there  is  in  Canada,  for  example. 

378 


Persia — The  Imperial  Persian  Consul  General 

Incredible  as  it  may  seem,  although  we  have  a  population  of 
five  million  people  only,  the  total  import  and  export  trade  of  our 
country  is  about  as  great  as  that  of  the  whole  empire  of  Japan. 

Among  the  purchasing  nations  buying  products  from  the 
United  States,  I  think  since  the  war  Australia  figures  about  in  the 
first  seven  of  the  highest  purchasers  of  goods  from  the  great 
American  republic.  So  that  in  the  trade  affairs  of  the  United 
States,  Australia  in  relation  to  her  population  is  playing  a  very, 
very  big  part. 

When  you  consider  the  trade  connections  of  the  present  and 
what  has  gone  before,  when  you  realize  the  possibilities  of  the 
future  development  and  the  fact  that  the  Australian  continent  at 
present  has  a  population  of  only  five  million  people,  whereas  it 
will  probably  have  fifty  millions  before  the  next  fifty  or  sixty  or 
seventy  years  have  gone  by,  you  begin  to  understand  that  all 
your  trade  efforts  in  Australia  have  so  far  only  been  the  overture 
of  what  is  going  to  happen  with  the  intelligent  exploiting  of  the 
trade  possibilities  that  should  be  carried  out  between  our  two 
countries.  (Great  applause.) 


THE  CHAIRMAN  :  Lieutenant  Simons'  definition  of  "grafter" 
certainly  makes  us  realize  that  Australia  is  at  the  antipodes. 
(Laughter.)  We  should  be  very  glad  indeed  to  have  it  come 
this  way,  however,  and  we  hope  that  after  awhile  it  may. 

Turning  from  the  consideration  of  these  modern  nations,  or 
this  modern  nation  particularly,  Australia,  we  have  on  our  pro- 
gram for  consideration  that  most  ancient  of  kingdoms,  of  which 
we  often  think  with  deep  interest  as  a  romantic  land,  as  we  study 
it  in  history;  and  now  it  is  brought  close  to  us  as  we  consider 
it  in  its  political  and  commercial  relations.  We  have  the  pleasure 
of  having  with  us  Mr.  Topakyan,  Imperial  Persian  Consul  Gen- 
eral, who  will  now  address  us.  (Applause.) 

Persia  Today  and  Tomorrow 

THE  IMPERIAL  PERSIAN  CONSUL  GENERAL:  Mr.  Chairman 
and  gentlemen:  It  is  with  a  peculiar  pleasure  that  I  enjoy  the 
honor  of  standing  before  a  distinguished  American  gathering  such 
as  yours,  because  of  the  warm-hearted  hospitality  which  here  is 
lavished  upon  the  stranger  and  the  foreigner  more  than  anywhere 
else  in  the  world. 

379 


Sixth  Session — Wednesday  Morning 


The  thought  of  the  great  war  which  overshadows  all  our 
lives  these  days  has  made  me  think  of  a  story  in  the  Imperial 
archives  of  Persia. 

At  the  early  hours  of  each  day,  three  hundred  years  ago, 
Shah  Abbas,  the  great  ruler  as  well  as  poet  of  Persia,  used  to 
go  down  into  his  garden  of  roses  to  listen  to  the  sweet  song  of 
a  particular  nightingale,  that  would  then  alight  among  the  rose 
bushes  and  sing  its  passionate  song  of  love  to  the  opening  rosebud. 

One  morning  the  Shah  missed  the  melody  of  the  nightingale, 
and  was  deeply  grieved  to  learn  from  his  chief  gardener  that  the 
day  before  the  Shah's  favorite  songster  had  been  stung  by  a  ser- 
pent and  had  died.  "That  serpent,"  said  Shah  Abbas,  "will  surely 
be  rewarded  by  fate  for  such  an  evil  deed."  A  few  days  later  the 
chief  gardener  came  to  the  Shah  and  related  with  amazement 
that,  while  digging  in  the  thick  shrubbery  near  the  imperial 
gardens,  his  shovel  had  severed  the  head  of  the  serpent  which 
killed  the  poor  nightingale. 

And  then,  one  day,  when  for  a  serious  offense  thoughtlessly 
committed  the  Shah  in  anger  commanded  that  the  chief  garden- 
er's head  should  be  struck  off,  the  chief  gardener  falling  on  his 
knees  pleaded  with  the  Shah  and,  reminding  him  of  the  fate 
of  the  serpent  in  the  rose  garden,  begged  that  his  life  be  spared, 
were  it  only  lest  His  Majesty  should  himself  fall  under  the 
sure  retribution  of  heaven.  And  Shah  Abbas  relented. 

I  wish,  gentlemen,  it  were  possible  to  bring  the  warning  of 
this  simple  story  of  ancient  Persia  to  the  hearts  of  all  the  nations 
at  war  in  Europe  today,  that  to  use  violence  to  settle  international 
differences  only  brings  down  the  displeasure  of  heaven  upon  the 
nations. 

Ancient  Persia  survived  the  disasters  of  the  ages  by  the  valor 
and  intelligence  of  her  sons.  Today  she  is  still  the  leader  of  the 
poetry  and  supreme  art  of  the  Orient,  bringing  the  beauty  of  her 
flowery  meadows  and  rose  gardens  to  the  permanent  adornment 
of  the  most  artistic  mansions  and  homes  of  the  great  West  with 
the  matchless  masterpieces  from  the  historic  looms  of  the  Empire 
of  Iran. 

There,  too,  Nature  with  lavish  hand  still  fills  the  storehouses 
of  commerce  with  her  precious  products,  securing  for  Persia 
no  mean  place  of  honor  in  the  markets  of  the  world. 

But  the  course  of  history  has  placed  Persia  in  the  ranks  of 
the  little  nations,  bearing,  as  she  had  to  in  common  with  the 
nations  of  the  Orient,  the  grievous  burdens  inherited  from  darker 

380 


Persia — The  Imperial  Persian  Consul  General 

days.  And  the  nineteenth  century  was  not  a  period  of  safety 
much  less  of  happiness  for  any  small  nation.  The  great  ones 
of  earth  were  busy  extending  the  tent-strings  of  their  vast  do- 
minions far  and  near,  and  the  fate  of  the  small  nations,  whether 
in  the  Balkans  or  the  home  of  Omar-Khayyam  or  on  the  Pacific 
shore,  seemed  to  be  abandoned  to  the  mercy  of  the  waves  of 
chance. 

And  yet  these  small  nations  have  hearts  and  souls  as  well 
as  the  great  nations,  and  their  homes,  where  childhood  and  wom- 
anhood find  care  and  protection,  are  as  precious  in  the  sight  of 
heaven  as  those  over  which  the  flags  of  the  great  powers  float. 

And  now,  in  the  merciful  providence  of  God,  we  are  promised 
the  dawn  of  a  new  day  for  our  afflicted  world — a  day  in  which 
international  morality  shall  become  the  permanent  law  of  all  na- 
tions— a  day  in  which  the  little  nations  shall  not  only  be  tolerated 
and  just  permitted  to  live  upon  God's  earth  (subject  to  the  con- 
venience and  profit  of  the  stronger  neighbors),  but  shall  become 
the  object  of  the  care  and  protection  and  true  brotherly  assist- 
ance of  the  greater  and  more  fortunate  nations.  And  we  are 
proud  and  supremely  happy  that  America  stands  today  as  the 
fearless  herald  and  prophet  of  that  new  era  of  international 
brotherhood  established  upon  the  law  of  justice.  I  am  sure  you 
will  all  pray  with  me  earnestly  for  the  speedy  coming  of  that 
tomorrow  of  peace  and  prosperity  for  all  the  world,  founded 
upon  the  true  brotherhood  of  all  nations.  Then  will  Persia  re- 
gain her  ancient  glory  through  the  genius  and  the  valor  of  her  sons 
of  the  new  generation,  and  the  caravans  of  Persia,  burdened  with 
her  wealth,  will  once  more  crowd  the  highways  of  commerce, 
starting  from  Resht  in  the  north  to  the  Red  Sea,  and  from  Mount 
Ararat  to  the  eastern  boundaries;  and  Persia  will  no  more  be 
called  a  backward  nation,  but  will  come  to  her  rightful  inheritance 
as  an  enlightened  and  progressive  nation,  to  join  in  the  great 
common  task  of  promoting  the  welfare  and  the  true  prosperity 
and  happiness  of  our  common  humanity. 


THE  CHAIRMAN  :  The  Committee  on  Recommendation  which 
was  appointed  yesterday  desires  to  present  a  report  to  the  Con- 
ference, but  before  asking  you  to  hear  that  report  I  shall  be 
very  glad,  and  I  know  you  will  be,  to  introduce  to  you  Mr. 
Kiretchjian,  First  Secretary  of  the  Imperial  Persian  Consulate 
General,  who  will  speak  to  us  for  a  few  moments. 

381 


Sixth  Session — Wednesday  Morning 


Address  of  Mr.  Herant  M.  Kiretchjian 

MR.  KIRETCHJIAN:  Mr.  Chairman,  ladies  and  gentlemen: 
The  Persia  of  today  has  the  resources  and  the  equipment  that 
made  the  Persia  of  old  days  so  glorious.  It  is  the  same  people, 
with  their  love  of  nature  and  art  as  well  as  of  agriculture  and 
of  the  home;  and  the  land  with  its  fertile  highlands,  its  mineral 
wealth  and  its  magnificent  position  on  the  highway  of  the  com- 
merce of  the  world  presents  a  field  for  the  development  of  all 
that  can  make  a  nation  prosperous  and  great  in  the  family  of 
modern  nations. 

We  are  full  of  business  ideas  and  aspirations,  there  are 
great  opportunities  in  Persia  for  American  enterprise  and  Ameri- 
can capital  to  help  in  bringing  back  the  ancient  glory  of  that  land. 

We,  here  in  America,  are  learning  today,  however — and  when 
I  say  today  I  mean  just  today  in  1915 — that  there  are  other 
forces  in  this  world  to  be  regarded  besides  the  beautiful,  friendly 
intercourse  of  commerce,  that  golden  bond  which  binds  the  na- 
tions together,  which  develops  humanity,  which  develops  courtesy 
and  which  establishes  righteousness;  because  commerce,  at  the 
foundation,  is  but  true,  honest  intercourse,  is  it  not  ? 

We  are  learning  that  there  are  other  things ;  and  poor  Persia 
through  all  the  great  nineteenth  century  learned  that  there  is 
such  a  thing  as  a  diplomacy  that  says  to  a  small  nation,  "You 
will  please  stand  aside."  "But  our  interests — our  life — our  com- 
mon inheritance  from  heaven  as  human  beings?"  "Well,  those 
things  are  sentimental.'' 

That  has  been  the  actual  fact. 

I  am  holding  here  a  brief  for  the  Oriental.  What  do  you 
think  of  the  Oriental?  The  Oriental  has  made  history,  science, 
religion,  all  that  the  world  has  in  the  West  today,  and  they  made 
history  for  you  at  tremendous  expense,  did  they  not  ?  Then  the 
light  moved  westward,  and  now  the  salvation  of  the  world  has 
to  come  from  the  West. 

Why  is  that?  Because  certain  ideas  have  bound  Oriental 
peoples  in  shackles.  But  that  had  nothing  to  do  with  the  younger 
generation  that  arose.  I  am  an  Armenian,  and  the  consul  general 
from  Persia  is  an  Armenian ;  for  in  the  ancient  land  of  Persia  the 
subject  races  are  honored,  and  the  Armenians  have  been  placed 
in  the  highest  positions.  Malcom  Khan,  the  honored  statesman 
and  ambassador  of  Persia  in  Great  Britain  for  many  years,  was  an 

382 


Persia — H.  M.  Kiretchjian 


Armenian,  and  the  Armenian  young  men  have  held  high  positions 
there,  as  in  Russia,  through  all  these  years. 

At  present,  under  the  terrible  and  unfortunate  conditions 
that  have  become  possible  in  Turkey,  anybody  in  the  Orient  should 
be  glad  enough  to  live.  I  do  not  say  that  in  a  spirit  of  discontent 
or  of  pessimism,  but  as  an  important  fact. 

The  message  I  bring  to  you  is  this :  The  foundation  of  com- 
merce, as  has  been  so  well  said  here,  is  faith  and  kindly  feeling 
toward  the  men  with  whom  you  are  going  to  deal.  That  is  the 
essence  of  the  Persian  life  and  the  essence  of  the  Armenian  life- — 
hospitality  in  the  largest  sense.  I  am  sure  it  is  the  adoption  of 
that  spirit  which  is  going  to  be  the  salvation  of  the  world. 

They  tell  the  story  of  Nasr-ed-din  Hodja,  the  Aesop  of  Tur- 
key, that  he  was  one  day  asked  the  question :  "When  will  the  end 
of  the  world  come  ?"  He  thought  a  little  while  and  then  he  said, 
"When  my  wife  dies  half  of  the  world  is  going  to  end,  and 
when  I  die  the  other  half  is  going  to  end."  (Laughter.)  That  is 
rightly  recognized  as  the  typical  spirit  of  the  Oriental. 

The  modern  generation  of  the  Oriental  countries,  however, 
have  been  awakened  to  strive  for  their  rightful  inheritance  on  the 
highway  of  progress,  abreast  of  the  leading  nations  of  the  world. 
In  the  case  of  many  of  the  smaller  nations,  however,  they  are 
placed  under  conditions  which  you  might  call  the  inherited  political 
problems  of  the  world,  which  have  made  it  impossible  for  them 
to  move  out  and  start  on  the  forward  way. 

Gladstone  says  that  to  achieve  freedom  a  nation  requires  to 
begin  with  some  small  measure  of  freedom.  I  am  sure  that  here 
in  America  we  do  feel  a  keen  interest  in  these  facts  of  the 
world's  history  of  today,  because  surely  commerce  does  not 
mean  simply  delving  in  the  earth  and  securing  its  generous 
products  and  exchanging  them;  because  in  that  very  act  there 
is  something  which  comes  boldly  to  the  surface,  and  that  is  our 
humanity. 

There  is  a  soul  back  of  this  world,  and  back  of  the  Universe, 
as  all  thinking  men  surely  believe;  and  therefore  there  are  cer- 
tain systems  and  methods  of  life  which  are  wrong,  and  certain 
systems  and  methods  of  life  which  are  right;  and  civilization 
means  upholding  and  maintaining  the  right.  And,  again,  surely 
wrong  that  is  committed  does  not  become  right  or  in  any  measure 
a  qualified  wrong  because  he  that  commits  it  is  known  as  a  great 
man  or  as  a  great  nation. 

383 


Sixth  Session — Wednesday  Morning 


We.  do  not  wish  to  complain,  but  we  say  that  we  believe  the 
day  has  come  when  those  things  shall  go,  and  when  the  hospi- 
tality of  individuals  will  become  the  hospitality  of  nations;  and 
America,  standing  as  she  does  at  the  pinnacle  of  modern  civiliza- 
tion, is  destined  to  be  the  leader  in  improving  the  condition  of 
mankind  by  bringing  about  a  better  understanding  and  genuine 
sympathy  between  the  peoples  of  the  earth. 

I  was  greatly  interested  in  the  addresses  of  the  gentlemen 
from  Australia,  who  gave  us  such  an  interesting  description  of 
that  wonderful  country,  the  magnitude  of  which  was  not  fully 
realized,  perhaps,  by  many  of  us.  They  can  say,  as  America  can 
say,  "We  have  made  a  nation" ;  and  what  a  great  thing  it  is  for 
them  and  for  us  to  be  able  to  say  that ;  for  America  stands  as  the 
wonderful  product  of  the  ages,  a  "new  nation  brought  forth  on 
this  continent"  after  a  new  pattern,  and  it  is  a  proud  reality  for  me 
to  be  able  to  come  here  and  to  say:  "This  is  my  country;  my 
country,  with  the  glorious  Flag  floating  from  the  Atlantic  to  the 
Pacific  without  the  shadow  of  a  bar  sinister  upon  its  starlit  blue 
to  mark  a  single  act  of  national  dishonor." 

The  moral  force  of  America  will  lay  the  foundation  of  a 
sound  commerce  throughout  the  world,  that  signifies  sound  inter- 
national relations  and  a  lasting  civilization.  Persia  and  Greece 
and  Montenegro  and  Servia  and  Armenia  and  Bulgaria  are  going 
then  to  enjoy  not  only  equal  rights,  but  the  civilized  world  will 
say  to  anyone  that  would  disturb  their  prosperity:  "Keep  your 
hands  off  the  children." 

If  I  ventured  to  suggest  one  thing  for  the  peace  of  the  world 
it  would  be  this :  What  wonders  could  have  been  accomplished  if 
part  of  the  vast  sums  of  money  that  have  been  spent  for  war  had 
been  spent  for  hospitality!  I  mean  if,  instead  of  having  those 
two  honorable  gentlemen  from  Australia,  we  had  a  thousand 
citizens  from  there  to  entertain  in  New  York  City,  at  the  expense 
of  the  city  or  at  the  expense  of  the  country,  and  then  a  thousand 
New  Yorkers  or  Americans  were  to  visit  as  guests  of  the  nation 
over  there,  and  let  that  become  an  international  custom  (as  it 
is  in  the  Orient  for  one  whole  family  to  call  upon  the  other  and 
spend  the  day  and  evening)  ;  what  a  marvelous  result  that  would 
bring  about  in  the  way  of  international  friendship  and  affection, 
and  what  wonders  it  would  work  toward  permanent  world  peace ! 
It  would  work  a  revelation  to  the  nations  in  bringing  to  pass  the 
day,  which  must  surely  come,  when  "man  to  man  the  world 
o'er  shall  brothers  be  and  a'  that." 

384 


Extension  of  Foreign  Banking  Relations 


I  thank  you  most  heartily,  ladies  and  gentlemen,  for  your 
attention,  and  for  the  honor  of  appearing  before  you  and  partici- 
pating in  these  most  interesting  and  instructive  proceedings ;  and 
I  am  proud  and  grateful  to  have  been  able  to  do  so  as  an  Ameri- 
can citizen.  (Great  applause.) 


THE  CHAIRMAN  :  I  have  just  now  been  informed  by  the 
Chairman  of  the  Committee  on  Recommendations  that  the  Com- 
mittee will  defer  its  report  until  later  in  the  sessions  of  the  Con- 
ference; and  undoubtedly  there  will  be  some  other  matters  pre- 
sented to  the  Committee,  so  that  it  will  be  more  desirable  to  have 
the  report  of  the  Committee  submitted  in  the  afternoon  than  at 
the  present  time. 

We  now  turn  to  a  subject  which  has  been  the  theme  of  many 
of  the  papers  and  of  the  most  interesting  speech  of  Mr.  Kies 
last  evening  regarding  the  methods  of  foreign  trade ;  and  we  now 
see  these  being  put  into  practical  effect  by  the  extension  of  our 
foreign  banking  relations. 

Mr.  Benjamin  Joy,  Vice-president  of  the  National  Shawmut 
Bank  of  Boston,  Massachusetts,  will  address  us  on  this  subject. 
It  is  needless  to  say  that  Mr.  Joy  speaks  as  an  expert  on  the  sub- 
ject of  his  paper.  I  have  much  pleasure  in  presenting  him  to 
the  Conference.  (Applause.) 

The  Extension  of  Our  Foreign  Banking  Relations 

By  BENJAMIN  JOY, 

Vice-President  National  Shawmut  Bank,  Boston 

There  are  four  factors  which  contribute  to  the  popular  belief 
that  it  is  time  for  the  United  States  to  undertake  the  extension  of 
its  direct  banking  into  foreign  countries. 

In  the  first  place  the  Federal  Reserve  Act  will,  according  to 
the  best  calculations,  increase  our  lending  capacity  three  thou- 
sand million  dollars,  and  this  money  will  inevitably  have  a  tend- 
ency to  find  an  outlet  on  account  of  the  pressure  of  inactive  funds. 

The  second  factor  is  the  remarkable  increase  in  our  foreign 
trade  and  the  dislocation  of  trade  relations  of  other  countries. 
Our  importers  have  recently  found  that  they  can  buy  goods  from 
other  countries  than  England,  France  and  Germany,  and  our  ex- 
porters have  discovered  that  they  can  profitably  sell  also  in  lands 
of  which  they  knew  little  before.  This  naturally  leads  them  to 
believe  that  direct  banking  arrangements  are  a  necessary  feature 
of  trade  relations. 

385 


Sixth  Session — Wednesday  Morning 


Another  factor  is  the  transfer  of  our  trade  balance  from  the 
debit  to  the  credit  side.  By  the  middle  of  November  the  visible 
balance  on  international  trade  was  in  excess  of  fifteen  hundred 
millions,  and  when  any  nation  becomes  the  accumulator  of  funds 
rather  than  a  disburser  of  funds  on  trade  balances  it  has  been 
history  that  that  nation  becomes  an  investor  in  foreign  lands. 

The  fourth  and  last  factor  in  creating  interest  in  our  foreign 
banking  is  the  wonderful  work  which  the  National  City  Bank  of 
New  York  has  undertaken  under  the  new  Reserve  Act.  Too  much 
credit  cannot  be  given  this  bank  for  its  initiative  and  for  the  way 
in  which  it  is  working  out  this  problem.  The  vast  resources  of 
this  institution  and  the  conservative  development  of  its  organiza- 
tion through  many  years  enable  it  successfully  to  undertake  enter- 
prises outside  the  power  of  most  banks.  Its  development  along 
these  lines,  therefore,  cannot  be  taken  as  a  basis  for  arguing  the 
extension  of  branch  banking  on  the  part  of  banks  having  from 
fifty  to  one  hundred  and  fifty  million  dollars  of  deposits. 

The  Problem  for  the  Average  Commercial  Bank 

The  average  commercial  bank,  then,  should  not  be  governed 
by  all  these  four  factors.  It  should  look  mostly  to  the  second — 
the  increase  in  foreign  trade,  and  by  this  attempt  to  decide  what 
the  increased  business  needs  in  the  way  of  banking  facilities  and 
what  banks  of  ordinary  size  throughout  the  United  States  can 
properly  do  to  aid  our  merchants  and  cooperate  in  the  extension 
of  their  foreign  trade. 

It  is  a  popular  idea  that  banks  must  be  pioneers  in  foreign 
trade,  and  that  upon  them  should  properly  fall  the  burden  of  ex- 
tending our  trade  relations  overseas.  It  is  probable  that  this  popu- 
lar conception  of  a  bank's  activities  is  based  somewhat  on  the  ex- 
amples of  foreign  banking  houses,  whose  branches  have  been  for 
many  years  part  of  the  national  and  international  systems. 

We  are  the  last  country  in  the  world  of  any  importance  to 
adopt  branch  banking,  and  in  considering  this  question  we  find 
that  other  nations  have  brought  it  to  a  high  state  of  perfection. 
This  deludes  us  into  the  feeling  that  it  is  an  easy  transaction. 
Let  us  take,  however,  an  early  example  of  German  experience. 
The  Deutsche  Bank  during  the  time  when  Germany  was  feeling 
the  need  of  an  outlet  for  its  commercial  activities  decided  that 
it  would  take  the  lead  in  such  matters  and  that  establishing  foreign 
branches  would  be  a  proper  use  of  its  capital.  Paragraph  2  of  its 
charter  states  that  "the  object  of  the  company  is  the  transaction 

386 


Extension  of  Foreign  Banking  Relations 


of  all  sorts  of  banking  business,  particularly  the  fostering  and 
facilitating  of  commercial  relations  between  Germany  and  the 
other  European  countries  and  overseas  markets." 

Experience  of  German  Banks 

In  accordance  with  this  policy  the  Deutsche  Bank  early  in 
its  history  attempted  the  establishment  of  an  agency  in  London 
which  soon  was  followed  by  the  purchase  of  an  interest  in  the 
German  Bank  of  London,  Limited.  Both  failed  in  the  course  of 
time.  Next,  in  1872,  the  bank  established  branches  in  Yokohama 
and  Shanghai,  but  these  also  proved  failures,  owing  to  the  de- 
preciation of  silver  and  the  consequent  impairment  of  the  in- 
vested capital.  (These  branches,  by  the  way,  were  formed  more 
with  the  purpose  of  establishing  a  market  for  German  marks 
than  of  acting  as  trade  pioneers  and  are,  therefore,  an  interesting 
experience  in  view  of  the  present  belief  in  the  need  of  establish- 
ing dollar  credits.)  In  1874,  the  same  year  that  the  Far  Eastern 
branches  were  closed,  the  La  Plata  Bank  was  taken  over,  but  in 
eleven  years  was  liquidated  at  a  loss.  At  the  same  time  the  bank 
established  the  policy  of  opening  domestic  branches  at  Bremen 
and  Hamburg.  New  York  was  not  overlooked  in  this  field,  and 
in  1872  a  silent  partnership  with  a  New  York  banking  house  was 
formed  which,  however,  was  in  turn  dissolved.  A  third  attempt 
was  made  in  London  in  1873,  and  this  has  proved  very  successful 
and  has  operated  extensively  and  well.  This  might  be  called  the 
first  chapter  in  the  history  of  the  extension  of  German  banking 
and  shows  as  a  net  result  the  establishment  of  three  branches  out 
of  nine  attempts.  It  shows  early  discouragement  and  financial 
loss  followed  by  striking  success  in  the  establishment  of  advance 
posts  for  the  observation  and  control  of  new  outlets  for  German 
merchandise. 

Governmental  Aids  of  the  Foreign  Trader 

But  in  citing  the  methods  pursued  by  European  banks  it 
must  be  remembered  that  there  is  much  more  than  banking  capital 
cooperating  with  the  foreign  trader.  There  is  the  governmental 
aid  through  differential  freight  rates  over  the  governmental  rail- 
roads. There  is  the  aid  of  trade  organizations  and  chambers  of 
commerce,  which  are  more  active  and  responsible  than  here.  There 
is  the  tremendous  help  of  a  merchant  marine,  able  in  large  part 
to  carry  the  country's  products,  and  this  last  is  a  very  practical 
advantage,  for  it  not  only  enables  the  country  to  favor  its  own 
merchants  but  enables  it  to  levy  a  tax  on  other  nations  and  to  build 

387 


Sixth  Session — Wednesday  Morning 


up  a  nation's  trade  by  discriminating  against  undue  competition 
by  others.  This  is  seen  to  perfection  in  the  syndicate  arrange- 
ment formerly  in  force  in  South  American  trade,  where  German 
and  English  shipowners  combined  to  boycott  all  business  which 
would  not  bind  itself  to  use  English  and  German  ships  exclusively. 
They  also  have  bounties  and  subsidies  and  price  agreements,  and 
our  merchants  are  constantly  realizing  these  handicaps  in  their 
foreign  relations. 

And  so  the  division  of  responsibility  in  these  matters  should 
be  distinct.  The  exporter  must  take  the  selling  risk  and  the  bank 
must  take  the  financial  risk.  The  bank's  responsibility  is  the  col- 
lection of  up-to-date  and  accurate  information,  the  offering  of 
proper  facilities  for  financing  the  merchant  in  the  most  economical 
way  and  for  the  proper  handling  of  the  shipment  at  the  other  end 
and  the  collection  of  the  amount  involved  when  due. 

Advantages  from  Dollar  Exchange 

A  supplementary  duty  of  our  banks  in  the  foreign  field  is  the 
minimizing  to  our  merchants  of  any  losses  through  exchange. 
To  overcome  this  dollar  exchange  is  being  established,  and  any 
extension  of  this  will  do  much  to  help  our  foreign  trade.  In  its 
essence  it  will  guarantee  to  the  exporter  that  he  will  receive  the 
actual  amount  which  he  has  reckoned  on  as  his  selling  price,  and 
that  the  importer  will  pay  to  the  foreign  seller  the  exact  amount 
in  terms  which  he  has  reckoned  on  as  his  cost,  both  of  these  being 
accomplished  by  eliminating  the  necessity  on  the  part  of  our  mer- 
chants of  converting  into  dollars  through  the  varying  media  of 
sterling,  marks  or  francs. 

Now  in  order  to  accomplish  these  things  an  American  bank 
can  do  one  of  three  things.  It  can  make  a  bank  in  any  desired 
country  its  correspondent;  it  can  form  a  joint-stock  bank,  or  it 
can  establish  its  own  branch. 

Through  a  correspondent  a  bank  may  obtain  without  the  in- 
vestment of  any  capital  the  services  of  an  established  institution. 
It  may  obtain  second-hand  credit  information  which  should  be  re- 
liable and  accurate.  It  may  obtain  the  establishment  of  proper 
credits  and  also  arrange  for  the  collection  of  drafts  and  the 
handling  of  the  shipping  documents;  in  other  words,  if  the 
responsibility  is  limited  to  financial  matters  only,  it  has  all  the  ad- 
vantages which  would  be  given  by  its  own  branch  with  the  ex- 
ception of  the  more  or  less  sentimental  one  of  having  one's  own 
name  over  the  door.  Granted,  then,  that  a  bank  does  not  assume 

388 


Extension  of  Foreign  Banking  Relations 


any  of  the  burden  of  introducing  American  goods  and  that  its 
pioneer  duties  consist  of  being  a  financial  agent  and  adviser  only, 
the  facilities  of  a  correspondent  and  a  branch  are  equal.  A 
difference  of  opinion  is  possible  only  on  the  question  of  the 
degree  to  which  a  bank  should  become  a  trading  outpost  for 
American  merchants. 

Financing  Through  a  Correspondent  Bank 

A  word  about  the  details  of  financing  through  a  correspond- 
ent. Suppose  that  the  purchaser  of  a  line  of  American  goods  be 
in  good  standing  with  his  local  bank,  and  that  this  bank  was  a 
correspondent  of  ours  in  Boston;  the  credit  line  which  we  give 
the  local  bank  would  enable  it  to  guarantee  the  importer's  bills, 
and  would  enable  the  importer  in  turn  to  draw  through  the  local 
bank  on  us,  so  that  by  this  method  he  would  be  enabled  to  pay 
cash  for  his  purchases  in  Boston  or  New  York  funds.  We  in 
turn  would  accept  the  draft  on  presentation,  and  our  acceptance 
would  entitle  the  draft  to  the  lowest  discount  rates.  The  triangle 
is  completed  by  our  depending  on  our  local  correspondent  to  cover 
the  draft  at  maturity,  it  in  turn  relying  on  its  customer.  I  might 
add  that  we  have  pursued  this  method  recently  with  eminent  suc- 
cess. Credit  information  obtained  through  established  banks, 
if  these  banks  are  not  too  intimately  connected  with  other  foreign 
countries,  is  apt  to  be  more  genuine  and  accurate  than  information 
obtained  by  one's  own  branch,  which  is  regarded,  of  course,  by 
local  merchants  and  by  the  local  banks  as  a  rival  institution.  As 
to  the  advantage  of  having  representation  in  one's  own  name  it 
seems  probable  that  with  intelligent  publicity  it  would  not  be  long 
before  our  merchants  would  look  upon  a  correspondent  bank 
as  a  friend  in  obtaining  all  the  necessary  banking  facilities. 

It  has  only  recently  become  necessary  for  our  merchants 
to  have  their  own  branch  banks  in  winning  foreign  trade.  While 
we  have  in  London  at  present  two  or  three  branches  or  agencies 
of  New  York  banks  they  do  not  play  an  important  part  in  ex- 
tending our  commercial  relations ;  in  other  words,  in  England  and 
in  continental  Europe  our  merchants  have  found  that  they  can 
transact  the  banking  end  of  their  foreign  business  without  diffi- 
culty and  with  perfect  ease  through  our  banking  correspondents 
there.  I  believe  that  the  relations  between  an  American  bank 
and  a  foreign  correspondent,  if  sufficient  time  and  consideration 
are  given  to  them,  can  be  made  as  close  and  as  pleasant  as  through 
any  other  medium.  The  Shawmut  Bank  has  pursued  this  policy 

389 


Sixth  Session — Wednesday  Morning 


during  the  last  year  and  a  half  and  has  found  it  eminently  satis- 
factory. We  are  not  ready  to  establish  branches,  but  we  have  been 
able  to  give  our  merchants,  I  believe,  a  satisfactory  foreign  service 
through  the  large  independent  government  banks  in  the  various 

countries. 

Advantages  of  a  Joint-stock  Bank 

The  second  step  would  come  when  trade  had  reached  such 
proportion  that  the  formation  of  an  American  bank  would  be 
warranted  by  the  trade  already  established.  It  would  then, 
perhaps,  be  best  for  an  institution  in  each  of  nine  or  ten  cities 
distributed  throughout  the  United  States  to  subscribe  to  a  joint- 
stock  bank.  It  would  be  evident  that  such  a  bank  would  dis- 
tribute its  business  geographically  over  the  United  States.  When 
we  in  the  East  were  using  its  credit  and  other  facilities  it  would 
be  probable  that  the  Pacific  Coast  bank  stockholders  would  not 
be  using  it  and  vice  versa,  owing  to  seasonal  demands.  Thus 
the  resources  and  capital  of  the  bank  would  always  be  working 
and  earning  money  at  times  when  a  single  bank's  branch  would 
not  be  fully  employed.  The  danger  in  a  joint-stock  bank  is  the  fact 
that  losses  incurred  by  any  one  of  its  owners  would  fall  on  all, 
but  this  in  turn  might  be  regarded  as  a  point  in  its  favor.  It 
might  be  called  a  "group  risk"  or  insurance  against  too  heavy 
losses  by  any  one  institution  in  its  foreign  business.  Now  this 
joint-stock  bank  would,  of  course,  come  only  as  the  need  of  it  was 
assured,  and  where  it  was  evident  that  the  business  needed  an  in- 
stitution of  its  own  with  which  to  transact  its  foreign  trade. 
It  is  easily  imaginable  that  where  business  is  built  up  with  any 
community  along  definite  commodity  lines,  the  need  of  bank 
credits  and  the  need  for  personal  attention  to  the  business  would 
outgrow  the  facilities  of  a  correspondent.  The  details  of  this 
problem  would  doubtless  work  out  so  that  it  would  be  better  and 
easier  to  purchase  one  of  the  existing  institutions  in  the  desired 
country,  for  in  this  way  would  be  overcome  to  a  large  degree 
local  prejudice  and  lack  of  a  trained  organization.  We  may  find  in 
Germany  an  example  of  this  development,  as  several  of  the  banks 
in  South  America  are  at  present  owned  jointly  by  the  larger 
German  banks,  and,  in  fact,  the  more  recent  development  in  that 
country  seems  to  be  toward  the  establishment  of  joint-stock  banks 
rather  than  branch  banks. 

Present  Obstacle  to  a  Joint-Stock  Bank 

The  only  present  obstacle  to  the  establishment  of  such  joint- 
stock  banks  is  the  uncertainty  as  to  the  legal  right  of  banks  to 

390 


Extension  of  Foreign  Banking  Relations 


subscribe  jointly  to  such  an  undertaking,  but  there  is  every  indica- 
tion on  the  part  of  the  present  administration  through  its  Federal 
Trade  Commission  and  its  departments,  as  well  as  on  the  part 
of  the  Federal  Reserve  Board,  to  interpret  very  liberally  the  right 
of  national  banks  to  enter  into  such  an  arrangement  along  cer- 
tain lines,  and  it  is  therefore  fair  to  assume  that  when  the  time 
comes  in  the  development  of  our  bank  relations  for  the  establish- 
ment of  such  banks  it  will  at  that  time  be  legally  possible  for  us 
to  do  so. 

The  third  method  is  of  course  the  branch  bank,  which,  for  the 
average  institution,  seems  to  me  to  be  a  last  and  somewhat  dis- 
tant step  in  development.  The  general  idea  that  it  is  time  for  us 
to  establish  branch  banks  is  at  least  partly  due  to  the  fact  that 
merchants  find  the  extension  of  long-time  credits  more  important 
in  the  new  fields  than  the  old.  Distance  is  thus  an  important 
element,  South  America,  South  Africa,  and  the  Far  East  being 
farther  removed  from  us  than  those  countries  to  which  we  have 
in  the  past  sold.  Then,  again,  the  liberal  terms  which  these  coun- 
tries have  been  granted  make  it  necessary  for  merchants  who  have 
not  a  cash  balance  out  of  proportion  to  their  business  to  have  much 
financing  on  the  part  of  banks.  These  two  factors  have,  perhaps, 
confused  the  public  mind,  so  that  the  purely  financial  part  of  the 
undertaking  grows  into  a  necessity  for  carrying  the  entire  burden 
of  foreign  trade  expansion. 

Obstacles  to  Branch  Banks 

Now  European  branch  banks  have  proved  to  be  on  the  whole 
profitable  investments  to  stockholders  and  of  immense  advantage 
to  the  extension  of  European  trade,  but  in  spite  of  the  fact  that 
the  system  of  branch  banking  has  been  so  long  established  and  that 
there  are  so  many  other  favorable  factors  which  enter  into  Euro- 
pean expansion  of  trade,  there  have  been  marked  failures,  heavy 
losses  and  liquidations.  European  experience  is  not  of  itself 
proof  of  the  desirability  of  branch  banking  for  this  country  at 
present. 

Regardless  of  the  experience  of  other  nations  there  are  cer- 
tain obstacles  which  make  our  commercial  banks,  as  a  whole, 
hesitate  before  committing  themselves  to  the  policy  of  foreign 
branches.  To  the  dangers  of  risk  and  expense  may  be  added  the 
further  problems  of  getting  local  deposits,  of  the  necessity  for  in- 
vesting permanently  in  local  enterprises,  of  overcoming  the  com- 
petition of  strong,  active  established  banks  and  the  creating  of  a 
competent  staff  of  bank  officials  out  of  a  supply  all  too  small. 

391 


Sixth  Session — Wednesday  Morning 


Still  another  reason  may  be  urged  for  our  progressing  very 
slowly  in  the  establishment  of  our  branch  banks.  Every  country 
in  the  world  has  a  port  which  is  its  commercial  distributing  center, 
and  this  city  is  usually  the  financial  center  also.  New  York  has 
attained  this  position  and  will,  of  course,  hold  it.  This  superiority 
of  New  York  in  the  volume  of  trade  is  in  itself  a  serious  con- 
sideration for  other  cities,  and  until  such  time  as  we  are  able 
to  open  domestic  branches  will,  I  believe,  prove  an  almost  over- 
whelming handicap  to  individual  branches.  It  is  in  like  manner  an 
argument  in  favor  of  the  joint-stock  bank  which  combines  the 
commercial  needs  of  several  localities.  If  we  regard  a  branch 
bank  as  the  final  development  in  the  trade  relations  between 
countries,  the  objections  which  I  have  just  mentioned  do  not 
apply  with  as  much  force  as  if  we  considered  a  branch  the  first 
step. 

Banks  Do  Not  Insure  Trade 

A  branch  bank's  greatest  work  is  a  guaranteeing  of  the  per- 
manent interest  of  our  merchants  and  our  banks  in  mutual  trade 
relations.  It  must  be  remembered,  however,  that  evidence  on  our 
part  of  a  desire  to  establish  and  maintain  trade  relations  is 
not  sufficient.  The  trade  of  any  country  will  go  to  the  nations 
selling  the  best  and  the  cheapest  and  in  the  form  in  which  the 
goods  are  desired. 

No  amount  of  American  capital  nor  the  American  banks  can 
insure  the  permanency  of  a  market.  Our  trade  figures  during  the 
last  year  make  it  evident  that  we  are  today  in  the  leading  position 
of  the  world  in  regard  to  foreign  trade,  but  we  can  hold  this  po- 
sition only  by  the  most  careful  and  conservative  methods.  Much 
of  our  trade  balance  has  resulted  from  an  increase  in  the  value  of 
our  exports.  The  port  of  Boston,  for  example,  shows  an  increase 
during  the  last  year  in  value  of  exports  of  sixty  million  dollars, 
but  the  clearances  in  the  foreign  trade  for  the  same  period  in- 
creased 25  per  cent,  in  net  tonnage.  In  other  words,  the  volume 
of  trade  from  that  port,  which  represents  normal  conditions  per- 
haps as  accurately  as  any  other  port,  may  be  said  to  have  only  held 
its  own.  This  increased  value  may  very  easily  vanish  over  night 
when  the  war  has  ended.  Prophecies  as  to  conditions  at  that 
time  are  of  little  use,  as  they  represent  theories  rather  than  facts, 
but  it  is  safe  to  assume  only  that  we  shall  have  worthy  competition 
in  our  foreign  markets  shortly  after  the  termination  of  the  war. 

We  have  but  to  consider  the  fact  that  after  the  Napoleonic 
wars,  which  lasted  many  years  longer  that  the  present  one  will, 

392 


Extension  of  Foreign  Banking  Relations 


England  staggered  under  a  debt  amounting  to  one-third  of  her 
total  value  and  yet,  within  a  few  short  years,  she  entered  into  one 
of  her  most  prosperous  commercial  periods  of  expansion.  Let  us 
also  remember  that  at  the  end  of  the  Franco-Prussian  war  a  huge 
indemnity  was  placed  upon  France,  but  economic  conditions  in 
the  two  countries  were  such  that  France  undersold  all  others  in 
Germany  in  certain  lines,  as  the  result  of  which  part  of  the  war 
indemnity  was  actually  paid  by  the  Germans  themselves  through 
the  conquest  of  their  domestic  markets  by  France.  England,  during 
the  present  war,  shows  a  decrease  in  her  export  trade  of  only 
24  per  cent.,  and  this  at  a  time  when  all  her  energies  are  being  ex- 
pended on  the  greatest  struggle  in  her  history. 

The  popular  demand  for  American  banks  on  the  part  of  our 
manufacturers  is  evident,  but  the  problems  are  very  complex  and 
varied.  American  bankers  realize  the  demand  and  they  are  also 
keenly  aware  of  the  difficulties  and  dangers.  They  desire  to  ex- 
tend their  banking  to  various  countries  only  on  a  firm  and  solid 
basis,  and  they  hope  never  to  be  obliged  to  retire  from  a  field 
where  they  have  once  established  themselves.  It  would  be  unwise 
to  base  the  extension  of  our  banking  facilities  on  our  present  posi- 
tion in  the  foreign  trade  field,  and  to  expand  our  banking  capital 
and  credit  on  the  faith  alone  of  a  continuation  of  this  rather 
unusual  position. 

I  believe  that  the  average  commercial  bank  should  grow  in  the 
foreign  field  only  through  the  successive  stages  of  a  foreign  cor- 
respondent, a  joint-stock  bank  and  a  branch  bank,  and  that  very 
few  institutions  can  afford  to  omit  either  of  the  two  preliminary 
stages. 


THE  CHAIRMAN:  Gentlemen,  a  discussion  of  the  subject  of 
the  extension  of  our  foreign  banking  relations  is  now  in  order.  In 
the  suggestive  paper  to  which  we  have  just  listened  there  are 
several  points  which  I  have  no  doubt  will  prove  a  source  of 
thought  to  you.  The  time  of  any  speaker  is  limited,  you  will 
notice  by  the  program,  to  five  minutes. 

MR.  NOEL:  Rather  than  ask  a  question,  Mr.  Chairman,  I 
would  like  to  call  attention  to  a  positive  fact  which  might  perhaps 
be  of  interest. 

As  a  publisher  of  newspapers  in  South  America,  in  Lima, 
Peru,  as  the  president  of  a  corporation  publishing  three  news- 
papers at  one  time  before  the  war,  as  engaged  in  business  in  Latin 
America,  having  dealings  with  banks  and  papers,  I  wish  to  call 

393 


Sixth  Session — Wednesday  Morning 


attention  to  the  fact  that  the  American  business  man  will  never 
get  a  fair  square  deal  through  a  correspondent. 

I  have  had  questions  of  discounts  and  of  paper,  and  I  have 
had  dealings  with  banks,  not  only  in  Peru  and  other  countries — 
and  let  me  tell  you  that  my  personal  experience  is  that  the  banks 
are  no  exception  to  the  rules  that  no  matter  how  honest  and 
honorable  their  intentions  are  human  nature  is  the  same  all  over 
the  world ;  they  look  after  their  own  interests  first,  and  I  consider 
it  would  be  rather  ingenuous  to  expect  anything  else. 

Our  people  go  down  there  and  they  are  banqueted  and 
treated  at  the  club  with  all  sorts  of  social  courtesies,  and  then 
they  go  back  and  ask  their  competitors  for  information  and  ask 
them  to  give  us  a  square  deal,  and  it  is  the  same  way  with  col- 
lections and  everything  else. 

As  stated  by  Mr.  Gonzales  yesterday  and  the  day  before,  the 
bankers  look  after  their  own  collections  first.  We  can  get  a 
limited  service,  we  can  get  a  fair  service,  a  fair  consideration, 
but  we  cannot  have  good  and  thorough  consideration,  Mr.  Joy, 
from  a  special  correspondent. 

I  quite  approve  of  the  plan  of  a  joint  bank.  There  are 
many  splendid  little  banks  in  South  America,  for  instance,  that 
can  be  purchased  or  controlled ;  and,  of  course,  there  is  a  question 
of  law  that  comes  in  there  which  I  know  nothing  about.  I  have 
simply  permitted  myself  to  call  attention  to  this  fact,  because  it 
is  a  matter  that  has  come  under  my  personal  observation  and 
sometimes  sad  experience.  (Applause.) 

THE  CHAIRMAN  :  Is  there  any  further  discussion,  gentlemen  ? 
The  time  is  passing  rapidly.  I  know  there  are  a  number  of  men 
who  can  discuss  this  subject  with  very  much  profit  to  the  mem- 
bers of  the  Conference. 

If  there  is  no  further  discussion,  we  will  pass  to  the  next 
item  on  our  program,  which  is,  ' 'Present  Foreign  Exchange 
Conditions,"  and  this  subject  will  be  discussed  by  Mr.  David 
H.  G.  Penny,  vice-president  of  the  Irving  National  Bank,  New 
York. 

Present  Foreign  Exchange  Conditions 

By  DAVID  H.  G.  PENNY, 

Vice-President  Irving  National  Bank,  New  York 

The  United  States  is  practically  the  only  country  today  that 
is  on  a  strictly  gold  basis  and  gold  continues  to  pour  in  to  an  un- 
welcome extent. 

394 


Present  Foreign  Exchange  Conditions 


Interest  rates  are  falling  in  Scandinavian  countries  and  Hol- 
land and  yet  the  exchanges  with  these  countries  are  climbing  to 
unheard  of  figures  and  no  one  can  say  at  what  point  they  will 
stop,  since  these  nations  cannot  obtain  gold  under  any  circum- 
stances. 

Bills  of  exchange  on  European  countries  are  in  reduced  vol- 
ume and  are  being  handled  in  most  cases  on  a  very  close  margin 
of  profit  considering  the  unusual  care  in  examining  documents  re- 
quired by  the  circumstances. 

We  have  a  series  of  conditions  which  have  never  happened 
before  and  will  probably  never  happen  again  within  a  millennium. 
The  nearest  approach  to  present  English  exchange  conditions  was 
about  fifty  years  ago.  Mr.  George  Clare  writes  in  this  connection 
in  his  excellent  book  on  the  A  B  C  of  the  Foreign  Exchanges,  with 
reference  to  the  crisis  in  England  in  1866  following  the  suspen- 
sion of  Overend  Gurney  &  Company — "For  full  three  months 
there  was  a  discount-margin  of  no  less  than  6  per  cent,  between 
London  and  Paris,  and  yet  the  exchange,  instead  of  rising,  fell  as 
far  as  it  was  possible  for  it  to  fall.  For  full  three  months  con- 
tinental bankers  could  have  bought  the  best  London  acceptances 
at  a  price  which  would  have  returned  them  9  or  10  per  cent.,  and 
yet,  so  low  had  our  credit  fallen  that  they  preferred  to  employ 
their  money  at  home  at  3  or  4  per  cent." 

Proper  War  Risk  Insurance 

This  is  a  question  that  gives  much  concern  to  banks  repre- 
senting foreign  interests  and  these  should  be  made  to  specify 
exactly  what  kind  of  war  risk  insurance  they  wish  taken  in  re- 
spect to  credits.  The  same  applies  to  credits  established  abroad 
for  local  customers,  although  the  risks  in  this  connection  are  less 
than  for  exports. 

Normal  and  Chaotic  Conditions 

In  normal  times  a  chronological  chart  showing  the  fluctua- 
tion of  exchange  between  two  financial  centers,  such  as  London 
and  Paris,  and  the  margin  between  the  discount  rates  in  the  re- 
spective places  will  very  closely  follow  each  other.  When  the 
discount  rate  in  London  is  higher  than  in  Paris  the  price  of 
London  check  will  be  dear  in  Paris  and  the  price  of  Paris  check 
will  be  correspondingly  cheap  in  London. 

But  the  chaotic  conditions  in  Europe  nullify  ordinary  con- 
siderations, as  bankers  must  consider  safety  before  profit.  This  is 
exemplified  in  the  reports  just  received  from  Holland  that  bank- 

395 


Sixth  Session — Wednesday  Morning 


ers  in  that  country  are  looking  to  invest  funds  in  this  country, 
notwithstanding  the  fact  that  exchange  in  Holland  on  New  York 
is  at  only  4^2  per  cent,  discount  as  against  exchange  on  London 
at  8  per  cent,  discount,  and,  furthermore,  interest  rates  are  more 
favorable  in  the  English  capital. 

The  little  country  of  dykes,  which  has  played  such  an  im- 
portant part  in  the  world's  history  for  centuries,  finds  it  profit- 
able to  carry  important  sums  in  English  loans  just  as  our  own 
banks  are  doing,  but  thinks  it  is  more  proper  to  have  a  diversity 
of  risks,  particularly  in  these  eventful  times. 

Necessity  for  Supporting  Exchange 

The  chief  concern  of  the  great  majority  of  bankers  last 
year,  as  regards  exchange  conditions,  was  the  effect  of  the  various 
moratoria  and  to  what  extent  outstanding  bills  would  be  paid. 
These  measures  are  generally  disposed  of  and  the  effects  are 
shown  to  have  been  overestimated,  thanks  to  the  prompt  and  ef- 
ficient steps  taken  by  the  Bank  of  England.  Our  concern  now  is 
to  support  exchange  so  that  our  best  customers  may  continue  buy- 
ing from  us. 

We  are  getting  a  fair  sample  of  what  our  neighbors  in  Brazil 
and  Chile,  besides  other  countries  too  numerous  to  mention,  have 
to  contend  with  in  the  way  of  exchange  fluctuations. 

There  is  no  department  of  a  modern  bank  offering  such  in- 
ducements for  the  safe  and  remunerative  employment  of  funds 
as  a  well  organized  Foreign  Department.  A  department  of  this 
kind  generally  enables  the  bank  to  carry  a  portion  of  its  im- 
mediately available  funds  at  better  rates  than  are  obtainable  at 
home  for  loans  repayable  with  equal  facility  and  also  permit  in- 
vestment at  short  time,  say  up  to  six  months,  such  as  in  90  days 
paper  on  South  America  and  other  distant  points,  drawn  in  dol- 
lars, on  much  better  terms  than  domestic  commercial  paper. 

"Dollar  Basis" 

The  handling  of  a  larger  portion  of  our  foreign  transac- 
tions on  a  dollar  basis  enables  smaller  banks  throughout  the  entire 
country  to  participate  in  foreign  exchange  business  without  hav- 
ing to  maintain  accounts  abroad  or  to  be  constantly  watching  the 
fluctuations  of  exchange.  Such  banks  do  well  in  remitting  their 
foreign  bills  through  financial  institutions  in  New  York  affording 
them  the  facility  of  cash  advances  or  acceptances  against  cover 
of  outstanding  collections  should  they  have  unexpected  use  of  the 
funds  invested  in  the  bills. 

396 


Present  Foreign  Exchange  Conditions 


It  is  good  business  to  pay  the  New  York  bank  a  slightly 
higher  commission  for  handling  the  bills  in  consideration  of  the 
facility  mentioned,  even  if  never  made  use  of,  particularly  as  the 
business  should  support  a  good  collection  charge  and  still  leave 
a  satisfactory  interest  return. 

The  present  rate  of  exchange  in  London  for  negotiating  Aus- 
tralian bills  at  sight  is  2  per  cent,  with  a  further  %  per  cent,  for 
each  30  days  currency.  American  banks  can  well  afford  to  nego- 
tiate time  bills  on  Australia  and  New  Zealand  on  a  better  basis 
since  they  have  the  assurance  that  with  regular  quotations  for 
dollars,  there  will  be  no  loss  of  exchange. 

Cable  delays  resulting  from  censorship  tend  to  restrict  arbi- 
trage operations  and  most  banks  are  preferring  direct  exchange. 
Indirect  operations  should  not  be  attempted  except  upon  a  margin 
justifying  the  risk. 

Quotations  are  published  every  day  in  the  principal  news- 
papers covering  draft  and  cable  transfers  on  Greece,  Argentina 
and  Brazil  in  the  money  of  these  countries. 

Canadian  Charges 

The  newest  departure  in  direct  exchange  and  the  one  prob- 
ably most  affecting  trade  in  this  country  is  the  recent  action  of  the 
New  York  Clearing  House  Committee  in  allowing  member  banks 
and  trust  companies  full  discretion  in  the  matter  of  charges  cov- 
ering Canadian  items. 

Canadian  checks  and  drafts  were,  for  about  seventeen  years 
previous  thereto,  subject  to  exchange  deduction  of  %  of  I  per 
cent,  by  New  York  Banking  institutions. 

An  important  Clearing  House  Bank  with  a  large  commercial 
clientele  is  already  dealing  in  Canadian  funds  through  its  foreign 
department  and  looks  for  lively  trade  in  this  direction. 

The  principal  trading  will,  however,  remain  across  the  border 
for  the  singular  rule  that  rates  of  exchange  between  one  center 
and  another  are  invariably  made  in  the  less  important  place.  For 
example :  The  rate  between  Spain  and  London  is  made  in  Madrid 
and  the  rate  between  Canada  and  New  York  is  made  in  Montreal. 
The  Indian  rate,  which  is  the  exception  proving  the  rule,  is  made 
in  London,  but  that  important  exchange  is  of  such  little  interest 
here  that  space  will  not  be  taken  up  to  explain  it. 

Extension  of  "  Dollar  Exchange  " 

Now  is  the  opportune  time  to  extend  the  negotiability  of  dol- 
lar exchange  and  bankers  should  spare  no  efforts  to  have  it 

397 


Sixth  Session — Wednesday  Morning 


quoted  in  every  foreign  market.  One  of  the  most  recent  an- 
nouncements in  this  respect  is  the  daily  quoting  by  the  Bank  of 
New  Zealand  at  its  principal  Australasian  offices  of  checks  and 
cable  transfers  in  dollars  on  New  York  and  on  the  principal  Amer- 
ican and  Canadian  cities. 

The  dollar  draft  was  never  better  known  than  it  is  at  present 
and  yet  a  great  deal  of  pioneer  work  is  necessary  before  bankers 
can  afford  to  rest. 

In  this  connection,  Commercial  Attache  Henry  D.  Baker, 
Petrograd,  writes  under  date  of  September  2ist:  "A  prominent 
American  traveler  now  in  Petrograd  took  with  him  from  New 
York  a  letter  of  credit  made  out  in  terms  of  American  dollars  and 
another  letter  of  credit  made  out  in  terms  of  English  pounds  ster- 
ling. On  his  way  here  he  had  occasion  to  draw  money  in  the 
Netherlands,  Germany,  Denmark  and  Sweden,  and  found  that  to 
local  banks  in  these  countries  the  dollar  letter  of  credit  was  ac- 
ceptable, as  also  to  the  banks  in  Petrograd.  The  letter  of  credit 
in  pounds  sterling  was  taken  along  chiefly  as  a  precaution  in  case 
of  any  difficulty  over  the  dollar  letter  of  credit,  but  in  all  the 
countries  visited  en  route  it  proved  an  unnecessary  precaution." 
It  is  of  course  understood  that  the  pound  sterling  letter  of  credit 
would  be  unavailable  in  Germany  unless  the  German  bank  would 
consent  to  make  payments  and  debit  same  to  the  current  account 
of  the  American  bank  issuing  the  credit  or  forward  the  drafts  to 
New  York  for  collection. 

The  unfavorable  result  of  the  establishment  of  dollar  ex- 
change is  that  American  bankers  must  step  aside  and  allow  rates 
of  exchange  to  be  fixed  abroad  and  the  relative  profit  to  be  ab- 
sorbed by  foreign  bankers.  On  the  other  hand,  the  American 
banks  will  profit  more  largely  from  the  employment  of  important 
balances  kept  with  them  by  foreign  banks  and  hankers  for  the 
operation  of  their  exchange  business  with  the  United  States  and 
the  commissions  for  accepting  bills.  The  net  result  should  be 
decidedly  in  favor  of  the  American  banks. 

A  very  large  proportion  of  the  acceptance  business  in  Eng- 
land was  handled  by  private  accepting  firms  and  by  the  London 
agencies  of  Continental  banks.  This  is  due  to  the  fact  that  the 
business  was  neglected  by  English  banks  in  much  the  same  way 
that  the  money  order  and  traveler's  check  business  was  for  many 
years  neglected  by  American  banks.  Shippers  are  now  generally 
insisting  upon  reimbursement  credits  exclusively  upon  London 
Clearing  House  banks. 

398 


Present  Foreign  Exchange  Conditions 


It  is  not  likely  that  the  accepting  business  of  this  country 
will  drift  to  any  extent  into  private  hands  as  the  banks  and  trust 
companies  are  fully  alive  to  their  responsibility  and  opportunities. 

Importance  of  International  Financing 

London  is  the  financial  center  of  the  world  only  because  she 
has  been  financing  so  much  more  trade  between  other  countries 
and  England.  New  York  can  only  acquire  that  distinction  when 
this  country  actually  finances  trade  between  other  countries  and 
when  Americans  participate  in  foreign  enterprises  and  buy  foreign 
securities  to  create  a  demand  for  bills  of  exchange  on  New  York 
to  liquidate  indebtedness  and  pay  interest  on  these  foreign  in- 
vestments. 

Credits  have  been  opened  for  generations  with  London  bank- 
ers covering  goods  shipped  between  the  United  States  and  coun- 
tries in  all  parts  of  the  world,  in  a  large  scale  covering  Cuban 
sugar  practically  all  shipped  to  the  United  States.  It  may  be  ex- 
pected that  this  business  will  be  largely  diverted  either  to  bankers 
here  or  in  the  countries  concerned  with  the  possible  exception  of 
shipments  between  the  United  States  and  British  possessions. 

The  acceptance  of  a  bill  of  exchange  by  a  New  York  bank 
for  account  of  an  American  importer  covering  a  shipment  of 
currants  from  Patras  to  New  York  has  not  as  far-reaching  effect 
upon  the  American  exchange  position  as  the  acceptance  of  a  bill 
of  exchange  for  equal  amount  on  a  New  York  bank  for  Greek 
account  covering  a  shipment  of  coffee,  either  direct  or  indirect, 
from  Brazil  to  Greece.  This  is  explained  by  the  fact  that  the  first 
case  simply  creates  a  balance  here  in  favor  of  the  Greek  bank, 
which  it  will  probably  use  for  the  payment  of  grain  or  other  mer- 
chandise for  shipment  to  Greece,  but  may,  however,  transfer  to 
another  center,  say  London  or  Paris,  but  the  second  case  must 
create  an  independent  credit  in  favor  of  the  Brazilian  bank  and  at 
the  same  time  establish  a  debit  to  the  Greek  bank,  which  the  latter 
is  obliged  to  eventually  cover  in  one  form  or  another.  This  cov- 
ering process  may  involve  several  countries  by  the  process  of 
arbitrage. 

Boston  must  be  congratulated  on  what  her  banks  have  done 
and  are  doing  for  the  cause.  A  prominent  national  bank  in  that 
city  leads  all  others  in  respect  to  the  amount  of  outstanding  dollar 
acceptances. 

It  is  well  to  bear  in  mind  that  every  million  dollars  of  ex- 
change drawn  in  dollars  covering  transactions  which  were  pre- 
399 


Sixth  Session — Wednesday  Morning 


viously  handled  in  pounds  means  $2,000,000  toward  the  financial 
supremacy  of  New  York. 


THE  CHAIRMAN  :  Gentlemen,  the  discussion  of  this  subject 
is  now  in  order. 

CAPTAIN  WHITE:  Mr.  Penny  has  stated  that  the  United 
States  is  the  only  country  on  the  gold  basis.  I  think  Mr.  Penny 
would  better  say  the  United  States  is  the  only  country  on  the 
gold  exchange  basis,  because,  as  a  matter  of  fact,  the  United 
States  is  not  on  a  gold  basis,  strictly  speaking.  We  have  con- 
fidence that  our  government  will  redeem  its  promises,  but  its 
promises  are  outstanding  to  the  amount  of  $345,000,000  of 
floating  debt  redeemable  at  the  United  States  sub-treasury  in 
gold ;  but,  in  order  to  get  that  gold,  it  has  sometimes  been  neces- 
sary for  our  government  to  go  into  the  gold  market  and  pur- 
chase it. 

That  is  not  altogether  a  reassuring  condition.  Our  govern- 
ment changes  every  four  years,  and  the  policy  of  our  govern- 
ment in  that  respect  is  liable  to  change,  or  to  be  affected  by  the 
influence  of  the  majority  of  the  party  that  is  in  power. 

In  addition  to  this  $345,000,000  of  floating  debt  there  is  a 
circulation  based  upon  the  national  debt,  in  round  numbers 
amounting  to  about  $1,000,000,000. 

Not  all  of  this  debt  is  used  by  the  national  banks  for  circu- 
lation, but  all  of  it  may  be  used  up  to  its  full  face  value. 

It  is  true  that  in  the  last  banking  law  that  was  passed 
steps  were  taken  to  reduce  the  volume  of  national  bank  circula- 
tion. That  promised  very  favorably  to  us  in  regard  to  a  step 
toward  going  to  a  strictly  gold  basis;  but,  unfortunately,  in 
that  same  banking  act  there  was  a  provision  whereby  the  National 
Reserve  banks  must  use  the  same  government  debt  as  a  basis  for 
circulation. 

Then  we  have,  in  addition — just  exactly  how  much  I  do  not 
know,  but  probably  $600,000,000 — that  are  represented  today  by 
silver  certificates.  True,  those  are  acceptable  as  payment  for 
customs  dues,  taxes,  and  so  forth;  and  as  long  as  they  are  so 
accepted  you  can  go  to  any  private  bank  and  get  gold  for  your 
silver  certificates;  but  you  cannot  go  to  the  United  States  sub- 
treasuries  in  the  United  States  and  get  gold  for  your  silver  dollars, 
because  one  time  when  I  was  ordered  abroad  I  tried  to  do  it,  and 
they  said  no,  that  they  could  not  do  it;  that  I  could  get  the 

400 


An  American  Discount  Market  and  Foreign  Trade 

silver  dollar,  but  if  I  wanted  a  gold  dollar  I  would  have  to  go 
to  the  banks  and  they  would  give  it  to  me. 

Until  this  condition  be  changed,  until  we  get  back  to  a 
strictly  gold  basis,  we  are  using  an  inflated  currency,  and  all 
values  in  the  United  States  are  inflated  values. 

There  are  many  of  you  who  remember  when  we  were  on 
a  paper  basis;  the  paper  dollar  or  the  paper  currency,  the  ''shin- 
plasters/'  were  the  only  things  in  evidence.  Then  we  went  from 
a  paper  currency,  which  at  one  time  increased  our  gold  dollar 
to  about  two  dollars  and  a  half — it  would  take  two  dollars  and  a 
half  of  greenbacks  to  get  a  gold  dollar — suddenly,  in  a  very 
short  time,  within  two  or  three  years,  we  were  able  to  transfer 
our  values  from  paper  to  gold.  But,  unfortunately,  the  re- 
demption of  the  public  debt  for  outstanding  currency  stopped, 
and  the  American  people  thought  that  it  would  be  cheaper  to  lend 
itself  $345,000,000  rather  than  to  pay  its  debts;  and  we  have 
been  suffering  from  that  psychological  act  ever  since.  It  is  affect- 
ing our  trade  relations.  It  affects  our  labor  prices  in  the  United 
States,  and  is  the  basic  defect  in  our  inability  to  meet  foreign 
competition.  (Applause.) 

THE  CHAIRMAN  :  Do  any  other  members  desire  to  speak  on 
this  subject? 

As  there  seems  to  be  none  we  will  proceed  with  the  program, 
and  the  next  paper  is  of  quite  equal  importance  with  the  one 
which  we  have  just  heard  from  Mr.  Penny,  and  will  be  treated 
by  an  authority  on  the  subject  matter,  Mr.  Rovensky,  who  is 
the  manager  of  the  foreign  exchange  department  of  the  National 
Bank  of  Commerce  of  this  city,  a  bank  which,  as  you  all  know, 
is  very  prominent  in  the  foreign  banking  field. 

I  take  pleasure  in  introducing  Mr.  Rovensky. 

The  Development  of  the  American  Discount 
Market  and  Its  Relations  to  Foreign  Trade 

By  JOHN  E.  ROVENSKY, 

Vice-President  of  the  National  Bank  of  Commerce  in  New  York 

America  is  a  land  of  wonderful  natural  resources.  Nature 
during  the  past  has  rewarded  man's  efforts  here  with  a  lavish  hand 
and  it  has  not  been  necessary  for  us  to  be  as  economical  in  our 
commercial  methods  as  are  our  competitors  across  the  seas. 
Abroad  where,  in  every  line  of  human  effort  from  that  of  the 
humblest  workingman  to  that  of  the  greatest  merchant,  profits 

401 


Sixth  Session — Wednesday  Morning 


are  steadily  being  reduced  by  competition  until  it  seems  that  the 
irreducible  minimum  has  been  reached,  it  becomes  a  matter  of 
vital  importance  that  every  penny  of  wastage  be  avoided.  In 
our  country  man's  labors  have  heretofore  been  most  generously  re- 
warded— comparatively  virgin  soils  have  annually  given  forth 
bountiful  harvests — mines  of  untold  wealth  have  been  discov- 
ered— immense  forests,  the  growth  of  centuries,  have  been  in- 
herited by  us  and  even  motive  power  has  been  furnished  to  us 
by  nature  in  the  form  of  numerous  waterfalls. 

Thus  assisted  by  nature  we  were  able  to  meet  the  keen  com- 
petition of  the  European  manufacturer  and  merchant  and  have 
scarcely  felt  the  great  handicap  of  the  lack  of  such  efficient  credit 
and  financial  machinery  as  that  possessed  by  the  leading  coun- 
tries across  the  Atlantic.  But  times  have  been  changing.  Our 
population  increased  and  natural  resources  decreased.  From  an 
agricultural  nation  we  were  rapidly  developing  into  a  manufac- 
turing nation  and  the  assistance  in  meeting  foreign  competition 
derived  from  nature  was  daily  diminishing.  Overproduction  of 
manufactured  goods  caused  us  to  seek  markets  abroad  and  there, 
not  protected  by  our  tariff  as  we  are  at  home,  we  met  the  foreign 
competitor  on  an  even  footing — not  always  with  success. 

A  subject  of  such  complex  nature  as  our  foreign  trade  naturally 
presents  innumerable  problems  and  I  shall,  within  the  limited  time 
at  my  disposal,  confine  myself  to  merely  one  phase  of  the  matter — 
the  retarding  influence  on  our  international  commerce  of  the 
absence  of  "Dollar  Exchange"  in  the  world's  financial  markets. 

Significance  of  Quotations  in  Foreign  Currency 

Have  you  ever  realized  the  full  significance  of  the  fact  that 
the  bulk  of  both  our  exports  and  imports  is  bought  and  sold 
in  terms  of  foreign  currency?  When  we  buy  hides  in  London, 
the  price  is  quoted  in  pounds  sterling;  when  we  buy  chemicals 
in  Germany,  the  price  is  quoted  in  marks,  and  even  when  we  buy 
coffee  in  South  America  the  price  is  not  quoted  in  our  own 
currency,  but  in  sterling.  On  the  other  hand,  when  we  sell  our 
finished  products  in  these  same  countries  we  are  again  obliged 
to  quote  prices  in  foreign  currencies.  This  practice,  though 
always  disadvantageous,  is  not  a  serious  handicap  in  the  case  of 
cash  transactions,  that  is,  sales  that  are  paid  for  by  cable  transfer 
or  sight  draft.  In  such  cases  the  American  merchant  is  able  to 
minimize  the  risk  of  loss  on  exchange  by  promptly  negotiating  his 
draft  (or  purchasing  the  exchange  as  the  case  may  be)  but  in  the 

402 


An  American  Discount  Market  and  Foreign  Trade 

case  of  transactions  where  some  time  must  elapse  between  the 
quoting  of  the  price  and  the  payment  of  the  bill  the  American 
merchant  is  at  a  serious  disadvantage  if  he  is  compelled  to  quote 
his  prices  in  a  foreign  currency. 

Let  us  take  as  an  instance,  the  importation  of  coffee  from 
Brazil,  as  the  business  was  conducted  prior  to  the  outbreak  of 
the  present  war.  The  American  importer  desiring  to  purchase 
the  coffee  was  compelled  by  custom  to  make  his  bid  in  sterling 
and  pay  the  coffee  merchant  by  means  of  a  sterling  commercial 
letter  of  credit  on  a  London  bank.  Under  the  terms  of  this 
letter  of  credit  the  Brazilian  coffee  merchant  drew  his  drafts 
in  pounds  sterling  for  the  value  of  his  shipments  at  90  days  sight 
on  a  London  bank.  He  was  willing  to  accept  reimbursement  in  this 
form  because  the  90  days  London  draft  drawn  under  such  let- 
ter of  credit  was  readily  taken  by  Brazilian  banks  as  cash  and 
he  could  calculate,  at  the  time  he  sold  his  coffee,  the  value  of  a 
sterling  draft  so  drawn  within  a  very  narrow  margin.  The 
Brazilian  banks  were  willing  to  cash  such  drafts  for  their  cus- 
tomers because  by  discounting  them  immediately  in  the  London 
open  discount  market  they  could  quickly  convert  them  into  cash 
funds  and  consequently  the  transaction  involved  no  tie-up  of 
funds  or  risk  of  loss  on  exchange. 

The  Brazilian  merchant,  however,  was  not  willing  prior  to 
the  passage  of  the  Federal  Reserve  Act  to  accept  a  payment  in 
the  form  of  a  three  months  draft  drawn  in  dollars.  Why?  Be- 
cause there  being  no  open  discount  market  in  the  United  States 
either  the  Brazilian  merchant  or  his  banker  would  have  been  com- 
pelled to  carry  the  bill  in  his  portfolio  until  maturity,  and  this, 
involving  the  risk  of  exchange  fluctuations  and  a  lock-up  of  cash, 
was  of  course  impracticable. 

Effect  on  the  Importer's  Business 

Now  let  us  see  what  effect  this  had  on  the  American  im- 
porter's business.  When  cabling  his  bid  for  the  coffee  to  the 
Brazilian  merchant,  he  was  compelled  to  estimate  what  sterling 
exchange  would  cost  him,  approximately  four  months  from  the 
date  of  his  cablegram.  This  period  was  consumed  by  the  time 
required  for  the  Brazilian  draft  to  reach  London  and  the  three 
months  tenor  of  the  bill.  Therefore,  if  the  American  importer 
sent  a  quotation  to  Brazil  for  a  consignment  of  coffee  valued  at 
£10,000  he  did  not  know  whether  at  the  maturity  of  the  90  days 
draft  drawn  against  such  shipment  he  would  be  called  upon  to 

403 


Sixth  Session — Wednesday  Morning 


pay  $48,900  or  $48,500.  He  was  thus  compelled  to  gamble  on 
the  course  of  the  exchange  market  and  if  he  overestimated  the 
danger  of  exchange  fluctuations  his  bid  was  not  as  good  as  that 
of  his  foreign  competitor  and  he  frequently  lost  the  business, 
while  if  he  under-estimated  the  exchange  fluctuation  he  lost 
money. 

Our  exports  and  imports  to  numerous  other  countries  suf- 
fered under  the  same  disadvantage.  Importers  of  hides  from 
India,  silk  from  Japan,  wool  from  Australia,  etc.,  did  not  know 
what  their  consignments  would  finally  cost  them  when  the  time  for 
payment  arrived.  They  were  compelled  to  guess  at  the  actual  cost 
of  their  raw  materials  and  do  business  on  the  basis  of  average 
quotations. 

Great  Increase  of  Risk  by  War 

When  the  war  broke  out,  these  risks  were  multiplied  tenfold. 
The  importer  who  was  obligated  to  pay  £10,000  four  months 
from  the  date  of  his  bid  could  not  safely  estimate  within  $5,000 
of  what  he  would  eventually  be  called  upon  to  pay.  Likewise  the 
exporter  could  not  estimate  within  10  per  cent,  of  what  would 
probably  be  the  proceeds  of  a  foreign  sale  made  on  90  days'  time. 
When  order  once  more  began  to  emerge  from  chaos  a  large  part 
of  these  difficulties  disappeared,  but  American  merchants  had 
learned  their  lesson  and  we  have  since  heard  much  talk  about  the 
desirability  of  doing  business  on  the  basis  of  "Dollar  Exchange" 
and  the  "Dollar  Bill." 

Our  efforts  to  introduce  "Dollar  Exchange"  abroad  have  been 
to  some  extent  successful;  for  instance,  in  South  America  and 
the  Orient  the  "Dollar  Bill"  is  steadily  gaining  in  popularity.  We 
must  not  deceive  ourselves,  however,  with  the  idea  that  old  cus- 
toms can  easily  be  overturned  and  the  "Dollar  Bill"  introduced; 
it  will  take  time  and  we  must  adopt  measures  that  will  place 
"Dollar  Exchange"  on  an  equal  footing  with  sterling,  franc  and 
mark  exchange.  We  must  bear  in  mind  that  the  European  war 
is  at  present  giving  us  a  great  advantage  over  our  former  com- 
petitors and  that  the  introduction  of  "Dollar  Exchange,"  gradual 
as  it  has  been,  would  have  been  much  slower  but  for  the  break- 
down of  Europe's  financial  mechanism. 

"Dollar  Exchange"  without  a  "Dollar  Discount  Market"  would 
be  an  impossibility.  Unless  time  drafts  on  New  York  City  can 
be  promptly  negotiated  here  at  advantageous  discount  rates  they 
will  not  be  accepted  by  the  bankers,  and  in  turn  by  the  merchants 
of  foreign  countries  in  payment  of  their  goods.  And  if  foreign 

404 


An  American  Discount  Market  and  Foreign  Trade 

merchants  who  ship  goods  to  us  do  not  accept  dollar  drafts  in 
payment  there  will  be  no  market  for  "Dollar  Exchange"  in  their 
city,  and  other  foreign  merchants  who  buy  from  us  will  also  be 
unwilling  to  make  their  purchases  in  terms  of  dollars  and  cents. 
If  foreign  merchants  are  to  do  their  buying  from  us  and  selling 
to  us  in  terms  of  our  currency,  there  must  be  an  active  market 
for  "Dollar  Exchange"  in  their  city,  otherwise  they  will  be  unable 
either  to  buy  or  sell  dollar  drafts  at  advantageous  rates,  and  they 
will  be  unwilling  to  assume  the  risks  of  loss  on  exchange  due  to  a 
limited  and  inactive  market.  If  international  commerce  was  trans- 
acted on  a  cash  basis,  the  existence  of  a  discount  market  here 
and  the  resultant  "Dollar  Exchange"  markets  abroad  would  not 
be  so  important,  but  as  the  greater  part  of  such  trade  is  financed 
by  means  of  time  drafts  there  must  be  an  active  "Dollar  Discount 
Market"  to  enable  foreign  merchants  to  promptly  realize  on  their 
"Dollar  Drafts." 

This  brings  us  to  the  question,  "What  is  the  present  status  of 
the  American  Discount  Market,  and  what  are  the  prospects  of  its 
development?" 

The  World's  Standard  Credit  Instrument 

Prior  to  the  enactment  of  the  Federal  Reserve  Act  national 
banks  were  prohibited  from  accepting  time  drafts.  As  a  result, 
bank  acceptances — the  standard  credit  instrument  of  the 
world — were  unknown  in  this  country.  In  every  branch  of  trade 
a  large  and  active  market  in  a  commodity  is  impossible  unless 
well  defined  standards  of  quality  are  established.  It  would  be 
impossible  to  have  a  cotton  exchange  unless  grades  of  cotton 
were  standardized.  It  would  be  impossible  to  have  a  wheat  mar- 
ket if  wheat  was  sold  in  a  mixed  mass  consisting  of  all  the  various 
grades.  The  business  could  be  conducted  only  in  the  form  of  in- 
dividual transactions  subject  to  negotiation  in  each  case.  It  is  the 
same  with  a  discount  market — we  must  have  a  standard  on  which 
rates  are  based. 

The  world  over  the  standard  credit  instrument  is  the  "Bank 
Acceptance."  Being  the  direct  obligation  of  a  prime  bank  the 
element  of  risk  is  eliminated,  and  only  the  value  of  the  use  of 
the  funds  during  the  tenor  of  the  bills  needs  to  be  considered  in 
fixing  the  rate  of  discount.  It  is,  therefore,  an  accurate  barometer 
of  the  value  of  money.  The  London  discount  market  quotes  a 
certain  rate  for  60  and  90  days  bills,  i.e.,  prime  bank  acceptances. 
The  rate  for  such  bills  fixes  the  level  of  the  market,  and  without 

405 


Sixth  Session — Wednesday  Morning 


such  bills  the  London  discount  market  would  not  be  the  world's 
central  money  market. 

Barely  one  year  has  elapsed  since  the  Federal  Reserve  Act, 
which  permits  national  banks  to  accept  time  drafts,  became 
effective,  and  during  this  brief  period  the  banks  of  this  country 
have  diligently  endeavored  to  introduce  the  American  bank  ac- 
ceptance on  the  markets  of  the  world.  As  I  have  stated  before, 
we  were  assisted  greatly  by  the  breakdown  of  Europe's  financial 
machinery.  Had  Europe's  discount  markets  continued  their  usual 
course  without  interruption  it  probably  would  have  taken  years 
for  us  to  induce  Oriental  merchants  to  take  dollar  letters  of 
credit  in  payment  for  their  merchandise,  and  Brazilian  growers 
to  take  dollar  credits  for  their  coffee. 

We  have  developed  in  this  short  time  an  active  market  in 
this  city  for  prime  bank  acceptances,  and  rates  ranging  as  low 
as  2  per  cent,  are  quoted  for  such  bills  to-day.  Of  course,  the 
main  reason  for  the  present  low  rate  of  discount  is  the  over-supply 
of  funds  at  this  center,  but  bank  acceptances  will  always  com- 
mand a  comparatively  low  rate,  as  they  are  the  most  attractive 
form  of  short-term  investment  that  a  banker  can  find,  and  they 
are  the  best  form  of  secondary  reserve.  As  a  certain  foreign 
banker  once  said:  "Investing  in  acceptances  enables  the  banker 
to  eat  his  cake  and  have  it,  too."  An  investment  in  an  "accept- 
ance" brings  the  banker  an  interest  return,  and  at  the  same  time 
it  is  almost  as  available  as  cash,  as  it  can  instantly  be  turned  into 
currency  by  being  sold  in  the  open  market. 

Dollar  Exchange  in  South  America 

These  low  discount  rates  are  making  the  "Dollar  Bill"  become 
more  popular  abroad — especially  in  South  America.  Its  popularity 
has  been  materially  assisted  by  the  willingness  on  the  part  of 
American  bankers  to  quote  rates  for  such  bills  "to  arrive,"  e.g. 
if  a  Valparaiso  banker  is  offered  by  his  depositor  a  90  days'  sight 
draft  on  New  York  he  can  cable  his  New  York  correspondents 
and  obtain  from  them  the  rate  at  which  they  will  discount  the 
bill  on  its  arrival  in  New  York  City.  He  is  thus  able  to  imme- 
diately calculate  the  exact  proceeds  that  will  be  credited  to  his 
account,  and  use  the  bill  as  though  it  was  an  ordinary  bank  check 
on  New  York  City.  Many  New  York  bankers  are  also  quoting 
foreign  exchange  rates  "to  arrive"  against  such  remittances.  If, 
for  instance,  a  Valparaiso  banker  has  received  from  his  depositor 
a  90  days'  sight  draft  on  New  York,  and  not  being  in  need  of  New 

406 


An  American  Discount  Market  and  Foreign  Trade 

York  exchange  would  prefer  to  convert  the  proceeds  into  ex- 
change on  London,  he  can  cable  his  New  York  correspondents 
and  they  will  quote  him  both  the  rate  at  which  they  will  discount 
the  draft  on  its  arrival  in  New  York  and  also  the  rate  of  ex- 
change at  which  they  will  then  remit  the  proceeds  to  London.  The 
Valparaiso  banker  is  thus  enabled,  at  the  very  moment  when  he 
purchases  the  "Dollar  Draft,"  to  calculate  the  exact  equivalent 
of  sterling  he  will  ultimately  receive  in  payment.  As  a  result  of 
the  development  of  the  American  discount  market  in  New  York 
City,  and  the  spirit  of  cooperation  shown  by  our  bankers,  we 
have  made  in  one  year  as  much  progress  in  introducing  the 
''Dollar  Bill"  in  South  America  as  Germany  made  in  ten  or  fifteen 
years  of  attempting  to  introduce  mark  exchange  there. 

It  is  impossible  to  estimate  with  any  degree  of  accuracy  the 
rate  of  progress  in  this  direction  that  will  be  maintained  in  the 
future.  The  conditions,  with  reference  to  "Dollar  Exchange,"  are 
different  in  each  foreign  country,  and  it  would  be  impossible  to 
cover  the  ground  within  the  time  at  my  disposal.  In  the  case  of 
South  America  it  must  be  remembered  that  if  the  "Dollar  Bill" 
is  to  maintain,  after  the  close  of  the  war,  its  present  rate  of  prog- 
ress, we  must  not  only  maintain  an  American  discount  market, 
with  interest  rates  comparing  favorably  with  those  quoted  in 
Europe,  but  we  must  also  develop  reciprocal  commercial  rela- 
tions. By  reciprocal  relations  I  mean  that  we  must  be  prepared 
not  only  to  sell  to  these  countries  but  also  to  buy  from  them.  It 
seems  to  me  that  most  American  merchants  look  upon  South 
America  only  as  a  field  in  which  sales  may  be  made.  It  is  perfectly 
obvious,  however,  that  if  "Dollar  Exchange"  is  to  be  active  in  the 
various  South  American  financial  markets  there  must  in  each 
market  be  sales  of  such  exchange  as  well  as  purchases.  It  is  the 
"one-sidedness"  of  the  "Dollar  Exchange"  market  in  such  coun- 
tries as  Chile  that  makes  it  necessary  for  American  bankers  to 
quote  sterling  exchange  rates  "to  arrive"  to  Valparaiso  bankers. 
The  Chilean  bankers  have  "Dollar  Exchange"  offered  to  them 
by  their  clients,  but  cannot  find  sufficient  purchasers  for  it,  and 
they  are,  therefore,  compelled  to  convert  it  into  other  currency 
for  which  they  have  greater  demand.  Of  course,  our  trade 
with  some  countries  will  always  be  more  or  less  one-sided,  on 
account  of  economic  conditions  prevailing  there,  but  to  a  large 
extent  the  present  "one-sidedness"  of  trade  must  be  remedied  if 
"Dollar  Exchange"  is  to  become  permanently  popular  in  the 
Southern  continent. 

407 


Seventh  Session — Wednesday  Afternoon 


While  I  realize  the  difficulties  of  the  task  before  us  I  feel 
confident  that  the  growing  financial  power  of  these  great  United 
States,  the  perfection  of  our  banking  system,  and,  eventually,  an 
American  merchant  marine,  will  cause  "Dollar  Exchange"  to 
steadily  forge  to  the  front  in  the  world's  markets,  and  in  time 
the  heavy  burden  now  resting  upon  our  foreign  commerce  in  the 
form  of  risks  of  exchange  will  be  greatly  reduced  through  our 
being  able  to  buy  and  sell  a  large  part  of  our  merchandise  in 
terms  of  dollars  and  cents. 


THE  CHAIRMAN  :  Gentlemen,  we  will  now  have  a  discussion 
on  this  very  important  and  interesting  topic  for  a  few  moments. 

Discussion  is  now  in  order. 

The  Conference,  so  far,  seems  to  be  more  in  the  mood  of 
absorption  than  of  expansion,  and  it  certainly  has  been  very 
profitable  to  have  the  papers  that  we  have  had  this  morning. 

There  does  not  seem  to  be  a  desire  for  a  further  discussion 
at  this  time,  and  we  will,  therefore,  take  a  recess  until  two 
o'clock. 

(Whereupon,  at  12:35  P.M.,  a  recess  was  taken  to  2  P.M.) 


SEVENTH  SESSION 

Wednesday  Afternoon,  December  8,  1915 

(The  session  was  called  to  order  at  2:00  P.M.,  Mr.  William 
McCarroll  in  the  chair.) 

THE  CHAIRMAN:  The  gentleman  who  will  now  address  us 
comes  from  a  country  of  exceeding  interest,  where  there  are 
said  to  be  more  races  of  people  and  more  diversities  of  religious 
belief  than  in  any  other  country  in  the  world;  he  comes  from 
one  of  the  most  distinguished  but  least  numerous — the  Parsees. 

I  have  very  great  pleasure  in  introducing  to  you  Mr.  N.  M. 
Marshall,  who  is  among  the  leaders  of  his  people  in  the  commer- 
cial life  of  India.  Mr.  Marshall  will  now  address  you.  (Ap- 
plause.) 

India 

By   NUSSERWANJEE  MANECKSHAW   MARSHALL, 

M.SocJ.E.,  M.I.A.E. 

Merchant  of  Bombay,  London  and  New  York. 

Mr.  Chairman  and  gentlemen  of  the  Conference:  I  am 
standing  before  you  as  representing  India,  a  land  of  great  historic 

408 


India — Nusserwanjee  Maneckshaw  Marshall 

antiquity,  rich  in  its  spiritual  and  moral  values.  The  material 
side  of  her  civilization,  though  subordinated  to  the  spiritual,  is 
none  the  less  active.  The  commercial  activity  of  the  ancient 
Indians  played  a  large  part  in  the  spread  of  Indian  civilization 
in  the  lands  bordering  the  Arabian  ocean  and  the  Indian  Arch- 
ipelago. The  early  industrialization  of  India  is  so  well  known 
that  it  hardly  needs  to  be  mentioned.  Unfortunately,  however, 
the  early  rise  of  Indian  manufactures  was  followed  by  its  early 
destruction,  by  causes  natural  and  otherwise.  Competition  be- 
tween manual  labor  and  machinery  resulted  in  victory  for  the 
latter,  and  today  the  industrial  life  of  the  Indian  people  is  nothing 
more  than  "the  short  and  simple  annals  of  the  poor." 

For  a  while  things  looked  pretty  somber  to  the  Hindu  folks, 
but,  as  you  know,  it  is  darkness  before  dawn.  Today  the  pros- 
pect is  bright  and  promising.  The  British,  though  sometimes  un- 
wise in  their  economic  policy,  have  provided  internal  peace  and 
external  protection,  and  the  alert  modern  Indian  knows  thor- 
oughly well  that  things  which  do  bake  our  bread  are  to  be 
attended  to  first. 

But  there  are  things  in  this  world  that  can't  thrive  without 
their  counterparts,  and  commerce  is  one  of  them.  Reciprocity 
is  its  soul.  From  time  immemorial  nations  have  competed  for 
the  Indian  trade — the  Portuguese,  Dutch,  French  and  English, 
not  to  speak  of  the  Babylonians,  Greeks  and  Romans.  The  Ger- 
mans, not  having  a  colonial  empire,  have  a  relatively  bigger  com- 
mercial empire,  if  I  may  use  that  term. 

India  an  Open  Market 

The  Americans,  I  am  sorry  to  say,  do  not  display  much  activ- 
ity along  this  line.  Given  a  large  dominion  with  unbounded 
natural  resources  the  average  American  is  confined  in  his  com- 
mercial activity  to  the  borders  of  the  American  continent.  This 
is  natural,  but  it  is  not  wise.  Freight  is  a  factor  in  trade  by  no 
means  less  important  than  economy.  In  my  opinion  trade  has 
two  counterparts,  producing  and  selling,  and  the  latter  overshad- 
ows the  former  in  its  importance.  To  sell  is  to  search  for  suit- 
able markets  and,  let  me  ask  you,  gentlemen,  where  is  the  market 
in  the  world  so  easy  and  so  vast  as  that  of  India  with  its  teeming 
millions?  Nowhere  will  you  find  a  market  kept  on  a  more  free 
trade  basis  than  that  of  India.  Hardly  will  you  meet  with  any 
competition  from  home  products,  for  there  are  none.  With  the 
internal  railways  you  can  send  your  goods  into  the  innermost  re- 

409 


Seventh  Session — Wednesday  Afternoon 


cesses  of  the  Indian  territory.  India  invites  you  to  trade,  and 
I  assure  you  the  profit  is  all  yours.  But  prosperous  trade  pre- 
supposes many  facilities,  and  the  want  thereof  as  you  all  know 
will  seriously  hamper  commercial  progress  unless  timely  effort  is 
made  to  remove  them. 

I  was  laboring  under  many  inconveniences  in  my  business  of 
exporting  from  this  country  to  India,  and,  until  this  opportunity 
was  offered  me  by  your  Association,  found  no  way  of  voicing  my 
troubles,  and  so,  therefore,  consider  myself  fortunate  in  being 
invited  to  this  Conference,  and  in  being  given  an  opportunity  to 
lay  before  you  the  difficulties  that  come  in  the  way  of  sending 
goods  from  American  ports  to  the  ports  of  India.  Besides  laying 
before  you  these  difficulties,  I  wish  to  touch  upon  the  most  im- 
portant point,  namely,  the  opportunities  for  investing  American 
capital  in  the  development  of  India. 

The  Empire  of  British  India  is  one  of  the  very  few  large 
countries  of  the  world  where  there  is  an  "open  door"  for  the  trade 
of  all  countries.  Small  tariff  duties  are  levied  for  revenue  purposes 
and  not  for  protection  of  Indian  industries,  and  these  low  duties 
apply  to  goods  from  all  countries  including  the  mother-country, 
England,  so  that  India  is  a  country  where  the  United  States  and 
all  other  lands  have  equal  rights  of  doing  business  without  tariff 
obstacles. 

The  requirements  of  the  people  of  India  have  long  been 
studied  by  German  and  Japanese  concerns  and  the  former  was  and 
latter  is  now  doing  business  on  an  elaborate  scale. 

I  may  here  mention  a  few  statistics  which  will  give  some 
idea  of  the  business  possibilities  of  British  India. 

Value  and  Sources  of  Imports 

Total  imports  from  the  United  Kingdom,  three  hundred 
eighty-one  million  dollars ;  from  Germany,  forty-one  million  and 
from  the  United  States  only  fifteen  million  dollars,  of  which 
nearly  half  represents  petroleum. 

Imports  from  the  United  Kingdom  of  piece  goods,  one  hun- 
dred eighty-two  million  dollars;  from  Germany,  four  million  five 
hundred  ninety-six  thousand  dollars ;  from  the  United  States,  eight 
hundred  forty-two  thousand  dollars  only,  and  from  Japan,  two 
million  seven  hundred  five  thousand  dollars. 

Imports  from  the  United  Kingdom  of  hardware  and  cutlery, 
seven  million  seven  hundred  and  two  thousand  dollars ;  from  Ger- 
many, two  million  seven  hundred  and  forty-seven  thousand  dol- 
lars; from  the  United  States,  nine  hundred  and  sixty-five  thou- 

410 


India — Nusserwanjee  Maneckshaw  Marshall 

sand  dollars  only,  and  from  Japan  one  hundred  and  fifty-six 
thousand  dollars. 

Imports  of  machinery  from  the  United  Kingdom,  twenty-two 
million  five  hundred  and  seventy-three  thousand  dollars;  from 
Germany  one  million  four  hundred  and  one  thousand  dollars,  and 
from  the  United  States  eight  hundred  and  eighteen  thousand 
dollars  only. 

Imports  of  other  articles  from  the  United  Kingdom,  twenty- 
one  million  one  hundred  and  seventy-seven  dollars;  from  Ger- 
many, five  million  seven  hundred  and  seventy-seven  dollars,  from 
the  United  States,  three  million  six  hundred  and  ninety-eight 
thousand  dollars,  and  from  Japan,  four  million  two  hundred  and 
forty-one  thousand  dollars. 

In  the  year  1913-14  the  United  States  controlled  only  two 
and  six-tenths  per  cent,  of  the  trade  of  British  India,  while  Ger- 
many controlled  six  and  nine-tenths,  and  the  United  Kingdom 
sixty-four  and  one-tenth. 

The  only  reason  for  the  United  States  being  backward  in 
trade  compared  to  Germany  is  that  Germany  has  constantly 
studied  the  various  requirements  of  the  people  and  has  taken 
considerable  trouble  to  establish  its  business  permanently  by 
sacrificing  immediate  profits  and  giving  many  concessions  to  gain 
trade. 

Indians  have  no  sentimental  preference  against  or  for  goods  of 
any  particular  country.  Generally  speaking,  price  conditions,  not 
sentiment,  are  the  predominating  factors  of  trade.  The  main 
thing  to  be  taken  into  consideration  with  most  articles  purchased 
by  the  masses  of  the  people  is  a  question  of  not  how  good  but 
how  cheap. 

Want  of  Direct  Shipping  Facilities 

The  fundamental  basis  of  a  successful  foreign  trade  is  the 
provision  of  an  adequate  merchant  marine  and  direct  scheduled 
service  between  the  countries  concerned.  Such  a  provision  elimi- 
nates the  middleman,  who  is  the  sole  cause  of  reducing  profits  for 
the  manufacturer  and  increasing  prices  to  the  consumer.  The 
middleman  is  thus  the  evil  of  the  two,  and  attempts  are  being 
made,  as  much  as  is  practicable,  to  eliminate  him  in  every  branch 
of  trade.  But  so  far  as  my  own  knowledge  and  information  go, 
no  attempt  seems  to  have  been  made  to  remove  the  middleman  who 
stands  in  the  way  of  this  country's  export  trade  to  my  country. 
In  the  first  place,  until  very  recent  times  there  was  no  direct 
marine  merchant  service  from  this  country  to  India.  American 

411 


Seventh  Session — Wednesday  Afternoon 


goods  were  shipped  to  Liverpool  in  American  bottoms,  whence 
they  were  re-shipped  to  India  in  English  vessels.  Very  often  the 
cargo  was  sent  direct  in  English  steamers.  In  any  case  the  con- 
sumers of  American  goods  in  India  had  to  pay  for  the  services 
of  the  intermediary.  This  had  a  bad  influence  upon  the  market 
for  American  goods  in  India. 

The  standard  of  living  in  this  country  is  very  high,  the  wages 
are  equally  high  and  the  distance  to  be  covered  is  sometimes  very 
great  before  goods  reach  the  port  of  shipment.  All  these  con- 
ditions tend  to  increase  the  prices  of  American  goods  in  India's 
markets,  and  when  the  profits  of  the  middleman  are  added  to  this 
increment  the  goods  cease  to  be  within  the  reach  of  an  Indian  pur- 
chaser. As  a  general  rule  the  Indian  buyer  is  a  poor  man.  Be- 
sides, the  markets  of  India  are  thrown  open  freely  to  the  whole 
outside  world,  and  thus  he  who  can  afford  to  sell  his  goods  cheap- 
est gets  control  of  the  markets.  The  result  of  all  this  is  that 
American  goods  have  ceased  to  gain  their  proper  share  of  the 
Indian  market. 

I  am  aware  that  since  the  outbreak  of  the  European  war  some 
arrangements  have  been  made  to  minimize  this  evil,  but  still,  con- 
sidering the  vast  scope  for  American  goods  in  our  markets,  there 
remains  much  to  be  done.  I  hope  you  will  give  your  careful  con- 
sideration to  the  matter,  and  if  possible  persuade  your  national 
government  to  take  steps  to  remove  these  obstacles. 

Exorbitant  Freight  Rates 

In  connection  with  the  shipping  question,  I  would  like  to 
direct  your  attention  to  the  freight  rates,  which  are  invariably  ex- 
orbitant. I  think  this  is  due  to  want  of  direct  merchant  service. 
Even  if  such  a  service  were  established,  and  the  ships  sailed  under 
the  American  flag,  the  freight  rates  are  likely  to  be  higher,  owing 
to  the  higher  rate  of  wages  in  this  country.  If,  then,  the  goods  are 
to  be  brought  within  the  reach  of  an  Indian  purchaser  the  manu- 
facturer will  have  to  be  satisfied,  for  some  time  at  least,  with  a 
smaller  rate  of  profit.  If  this  can  be  done,  then  I  think  freight 
rates  will  not  greatly  affect  the  prices  of  the  goods. 

In  the  same  way  the  rates  of  war  and  marine  insurance  are 
heavy.  The  former  are  due  to  the  abnormal  conditions,  no  doubt, 
but  the  latter  deserves  some  attention. 

Credit  the  Basis  of  Foreign  Trade 

Then  I  would  like  to  bring  to  your  notice  the  real  basic 
principle  of  foreign  trade.  You  all  know  that  in  the  international 
trade  direct  money  payments  are  scarcely  ever  made.  The  ac- 

412 


India — Nusserwanjee  Maneckshaw  Marshall 

counts  on  both  sides  are  settled  in  goods.  The  imports  of  one 
country  are  paid  for  by  the  exports  of  that  country.  Accounts 
are  settled  and  set  off  through  the  banking  houses  of  the  different 
countries.  This  arrangement  presupposes  business  on  a  great  scale 
and  with  men  of  settled  reputation.  But  when  trade  is  to  be  de- 
veloped with  a  new  country  and  a  new  people  there  must  be 
made  some  allowance  from  such  an  established  practice.  When 
a  man  from  India  conies  to  this  country  and  tries  to  do  export 
business  his  great  difficulty  is  to  get  credit  with  the  American 
banks.  Even  with  the  best  and  most  reliable  testimonials  he 
is  not  always  accommodated.  He  is  expected  to  do  business 
in  hard  cash.  Now,  you  can  imagine  the  hardships  and  the  paucity 
of  business  under  such  circumstances. 

Packing  Goods 

In  the  majority  of  cases  I  have  found  that  the  American  way 
of  packing  does  not  meet  with  the  desires  of  Indian  merchants. 
The  reasons  are  many.  The  packing  originally  may  have  been 
good  but  impaired  during  course  of  transit.  The  distance  to  be 
covered  is  many  thousand  of  miles,  the  packages  have  to  pass 
through  many  changes  of  climates,  and  many  similar  things. 
Such  things  ought  to  be  investigated  before  settling  the  nature  of 
the  packing. 

So  far  I  have  laid  before  you  a  few  difficulties  that  have 
forced  themselves  upon  my  mind.  There  are  other  minor  details 
which  would  take  too  much  of  your  valuable  time.  I  will  finish 
my  paper  by  pointing  out  to  you  a  few  fields  of  American 
investment  in  my  country. 

Agricultural  Implements  and  Machinery 

You  all  know  that  India  is  the  granary  of  the  Orient  and  has 
been  the  main  source  of  food  for  many  of  the  European  countries 
since  sailing  and  steam  vessels  began  to  carry  on  international 
trade.  The  main  industry  of  India  is  at  present  agriculture. 
India's  farmer  is  no  less  eager  to  take  out  of  his  mother  land  than 
is  his  American  brother.  He  is  no  longer  satisfied  with  his  crude 
implements.  He  is  desirous  of  using  the  modern  labor-saving 
mechanical  devices  and  scientific  manures.  America  is  the  lead- 
ing country  in  the  manufacture  of  these  two.  American  iron 
ploughs  are  used  far  and  wide  on  Russian,  Egyptian,  Siberian, 
European  and,  to  some  extent,  on  Indian  farms.  But  to  my  mind 
our  farmers  do  not  know  all  about  the  numerous  American  de- 
vices. It  is  necessary  to  acquaint  them  with  all  of  these  and  for 

413 


Seventh  Session — Wednesday  Afternoon 


this  purpose  I  think  it  would  be  better  if  small  museums  of 
American  agricultural  implements  were  established  in  different 
parts  of  India  where  there  are  American  consulates.  This  would 
be  a  great  advertisement,  because  whosoever  desires  to  know  of 
any  new  devices  might  go  to  the  nearest  American  museum  and 
see  them  with  his  own  eyes.  Very  often  paper  advertisements  do 
not  satisfactorily  force  themselves  upon  the  attention  of  people 
in  general  and  farmers  in  particular.  The  same  may  be  said  with 
regard  to  markets  for  hardware  and  other  iron  goods  and  ma- 
chinery. 

Opening  for  Banking  Business 

India  is  a  vast  country.  In  area  it  is  nearly  equal  to  this 
country.  It  is  rich  in  natural  resources,  in  flora  and  fauna,  in 
minerals  and  geological  formations.  All  these  resources  have 
not  been  exploited  as  yet.  To  do  this  requires  expert  labor, 
capital  and  organization.  After  the  outbreak  of  the  European 
war  the  Department  of  Commerce  at  Washington  sent  its  experts 
to  Latin  America  to  investigate  the  opportunities  for  American 
investments.  Organizations  seem  to  have  been  formed  to  invest 
capital  in  Russia,  but  no  attempt  is  made  to  see  if  there  is  any 
field  in  the  Indian  peninsula. 

Gentlemen,  you  will  please  excuse  me,  if  here  I  say  that  the 
knowledge  about  India  is  very  meagre  in  this  country.  I  think 
if  the  sources  for  investment  and  business  conditions  in  India 
were  carefully  investigated  you  would  find  ample  opportunities 
for  business.  Particularly  I  think  that  there  is  a  great  need  for 
banking  facilities  in  my  country.  You  did  not  accept  the  prin- 
ciples of  a  branch  banking  system  till  very  recently,  and  now  you 
find  that  your  present  system  of  the  Federal  Reserve  banks  has 
proved  most  useful  in  mobilizing  the  country's  capital  for  its 
financial  needs.  So  if  you  establish  a  central  bank  with  several 
branches  in  my  country  both  your  countrymen  as  well  as  mine 
will  be  benefited.  This  would  help  to  reduce  the  rate  of  exchange 
between  the  American  dollar  and  the  Indian  rupee,  and  such  a 
reduction  in  exchange  means  a  great  stimulus  to  trade. 

The  mutual  advantages  that  we  are  likely  to  reap  from  such 
a  trade  relationship  though  apparently  material  can  hardly  be 
estimated  in  terms  of  coin.  Commerce  in  my  opinion  is  the 
greatest  socializing  influence  (I  was  about  to  say  institution)  that 
mankind  has  ever  brought  into  play.  Like  all  things  that  con- 
stitute a  common  cycle  of  participation  it  becomes  charged  with 

414 


Advertising  in  Foreign  Trade 


emotional  values  which  in  their  turn  create  mutual  sympathy  and 
self-respect  and  mutual  understanding.  Commerce  is  regarded  as 
the  cause  of  war,  but  in  my  opinion  there  is  no  other  panacea  for 
war  than  commerce  itself.  When  the  sympathizing  side  of  com- 
merce shall  keep  in  control  the  pecuniary  logic  thereof  we  may 
rest  assured  that  we  shall  have  few  wars  and  as  business  men 
can  proudly  claim  a  share  in  that  consummation  so  devoutly 
to  be  wished. 


THE  CHAIRMAN  :  We  have  been  engaged  in  this  Conference 
in  considering  the  wide  and  broad  features  of  commercial  affairs. 

We  now  turn  to  a  somewhat  different  branch,  one  perhaps 
no  less  important  than  some  of  the  others,  what  might  perhaps 
be  called  the  romance  of  business — not  that  I  mean  that  there  is 
any  romance  in  advertising,  but  this  subject  will  be  treated 
by  one  who  is  recognized  as  an  expert  in  advertising  methods 
and  in  making  goods  known  throughout  the  markets  of  the  world. 

I  have  great  pleasure  in  introducing  Mr.  Hugh  M.  Kahler, 
of  New  York. 

Advertising  in  Foreign  Trade 

By  HUGH  M.  KAHLER. 

MR.  KAHLER:  Mr.  Chairman  and  gentlemen  of  the  Inter- 
national Trade  Conference :  Advertising  falls  more  or  less  natur- 
ally into  two  great  divisions :  the  advertising  that  you  buy  and 
pay  for,  and  the  advertising  that  no  money  can  buy — that  has 
got  to  be  earned. 

The  main  difference  between  advertising  as  we  know  it 
here  at  home  and  advertising  as  we  see  it  in  foreign  trade  lies 
right  there.  Foreign  advertising  falls  principally  into  the  second 
division — advertising  that  has  got  to  be  earned. 

Here  in  America  we  have  reduced  advertising  to  a  finer 
degree  of  art  and  science  than  you  will  find  anywhere  else  on 
earth,  even  in  the  most  advanced  European  countries,  where,  in 
this  respect,  you  will  find  the  existing  machinery,  the  existing 
mechanism,  far  short  of  that  which  we  use  here  in  our  daily 
business.  The  papers  are  not  so  good;  their  advertising  science 
has  not  been  reduced  to  that  degree  of  precision  that  we  have 
here  at  home,  as  a  matter  of  course.  In  fact,  when  you  begin 
to  talk  export  advertising,  or,  rather,  advertising  in  foreign  trade, 
to  most  people,  they  will  ask  you  if  such  a  thing  exists,  because 
they  are  thinking,  as  most  people  do  think,  of  printer's  ink  ad- 

415 


Seventh  Session — Wednesday  Afternoon 


vertising,  of  pages  in  newspapers  and  magazines,  of  painted  walls 
and  street  car  cards,  of  electric  signs  against  the  night. 

Honesty  of  Goods  and  Prices  the  Best  Advertisement 

I  think  advertising  in  foreign  trade  is  much  more  neces- 
sarily a  matter  of  good  will,  as  we  call  it  here.  It  is  the  ad- 
vertising that  is  combined  of  honest  goods  and  honest  prices, 
honest  dealing  over  a  term  of  years.  You  cannot  buy  that  ad- 
vertising by  bringing  a  check  into  a  publication  office,  or  listen- 
ing to  the  solicitation  of  a  gentlemanly  young  man  who  presents 
an  engraved  card  to  your  office  boy.  You  have  got  to  earn  it 
by  years  and  years  of  honest  goods,  honest  prices,  honest  deal- 
ings and  something  more  than  that — courteous  dealings. 

I  do  not  say  that  that  is  an  infallible  kind  of  advertising, 
but  I  do  say  that  no  foreign  campaign  of  any  sort  ever  suc- 
ceeded without  it;  and  the  same  goes  just  as  strong  for  any 
domestic  campaign. 

I  was  not  asked  here  to  discuss  that,  however.  That  is  a 
basic  principle  of  business.  Everybody  knows  that  if  a  man's 
goods  are  not  right,  and  his  prices  are  not  right,  and  his  methods 
are  not  right,  he  cannot  hope  for  any  large  degree  of  success 
anywhere.  That  is  just  as  true  in  domestic  trade  as  it  is  in  for- 
eign trade.  I  am  just  calling  attention  to  it  here  because  most 
people  think  that  there  is  no  such  thing  as  foreign  advertising; 
that  foreign  trade  contradicts  the  law  which  we  know  is  true 
at  home,  that  no  business  succeeds  unless  it  is  advertised  in  one 
form  or  another. 

I  suppose  you  want  to  hear  something  from  me  as  a  prac- 
tical dealer  in  printer's  ink,  as  applied  to  foreign  trade,  and 
the  ways  and  means  that  should  be  adopted  in  order  to  get  the 
best  value,  dollar  for  dollar,  out  of  that  kind  of  work. 

If  I  were  called  upon  to  frame  a  campaign  of  advertising 
in  the  foreign  field  for  any  particular  business  I  would  pro- 
ceed somewhat  along  these  lines — possibly  that  is  the  best  way 
for  me  to  place  my  views  and  what  little  I  know  about  this 
subject  before  you  in  concrete  form,  so  that  if  there  is  anything 
of  value  in  it  you  can  get  it. 

Selection  of  the  Field  for  Advertising 

First  of  all  I  would  try  and  select  the  field  which  promised 
the  best  returns.  As  things  stand  now  it  would  not  be  difficult, 
because  in  probably  ninety-nine  businesses  out  of  a  hundred, 
you  have  got  to  look  somewhere  in  the  Western  hemisphere  and 

416 


Advertising  in  Foreign  Trade 


somewhere  south  of  the  equator  for  it.  But  that  varies,  of 
course,  with  the  different  products.  It  may  be  that  your  market 
lies  elsewhere.  Anyway,  before  I  spent  a  dollar,  or  before  I 
thought  of  spending  a  dollar,  I  would  try  to  find  a  place  where 
my  goods  were  most  likely  to  find  public  favor;  and  before  I 
spent  a  dollar  in  any  place  I  should  want  to  be  pretty  strongly 
intrenched  in  the  field.  I  do  not  mean,  now,  to  include  in  export 
advertising  the  kind  of  advertising  you  buy  from  the  export  trade 
journals.  I  am  talking,  now,  about  advertising  as  we  understand 
it  here:  advertising  directed  toward  the  consumer  of  the  mer- 
chandise, direct  advertising  toward  the  person  who  is  going  to  buy 
the  goods  and  use  them. 

Before  you  can  possibly  cash  in  on  foreign  advertising,  or, 
for  that  matter,  advertising  anywhere  on  earth,  you  have  got 
to  have  the  goods  where  the  consumer  can  buy  them  with  the 
least  possible  resistance ;  and  unless  a  man  is  in  that  position  and 
can  do  that  he  had  better  stay  away  from  advertising  altogether 
and  save  his  money,  because  he  will  lose  it  if  he  does  not. 

The  Selection  of  a  Trade  Name 

Supposing,  however,  that  a  house  is  in  that  position,  that  it 
has  its  goods  on  sale,  or  at  least  has  its  goods  where  they  can  be 
easily  and  quickly  placed  on  sale  in  response  to  a  created  demand 
for  them,  the  next  proposition  that  would  occur  to  me  would  be 
the  name  under  which  those  goods  were  to  be  sold. 

It  is  easy  to  take  the  fact  for  granted  that  because  a  name  has 
been  successful  and  is  well  known  here  in  the  United  States 
it  must  necessarily  be  equally  successful  somewhere  else.  That 
is  a  fallacy.  It  sometimes  follows  that  that  is  so,  but  not  always, 
by  any  means. 

Take  the  name  "Pianola."  It  would  be  hard  to  beat  that  in 
any  language  in  the  world.  Take  the  name  "President"  as  ap- 
plied to  suspenders,  and  it  is  pretty  nearly  one  hundred  per  cent, 
efficient.  The  name  "Victor,"  which  we  find  on  typewriters  and 
phonographs  and  a  number  of  other  American  products  is  equally 
good. 

There  are,  however,  names,  and  any  number  of  them,  which 
are  absolutely  unfitted  for  one  foreign  field  or  another,  and  there 
are  some  which  are  unfitted  for  all. 

I  recall  a  case — as  a  matter  of  fact,  it  is  not  a  matter  of 
memory,  because  it  is  still  in  course  of  operation — in  which  a 
very  successful  American  house  is  spending  quite  a  lot  of  money 

417 


Seventh  Session — Wednesday  Afternoon 


trying  to  persuade  the  Spanish-American  public  to  ask  for  a 
certain  brand  of  pills  under  the  name  "Williams."  Anybody  who 
knows  Spanish  knows  that  "Williams"  is  an  impossible  name  for 
the  Spanish  palate.  They  cannot  say  it.  When  you  ask  a  man 
to  go  into  a  drug  store  and  say :  "I  don't  want  pink  pills ;  I  want 
Dr.  Williams'  pink  pills,"  you  are  asking  him  to  do  an  impossible 
thing,  under  the  circumstances  I  have  mentioned,  and  you  are 
wasting  your  money.  It  would  be  a  great  deal  better  to  discard 
the  ancient  and  honorable  name  of  "Williams"  and  rechristen 
those  pills,  for  that  particular  market,  with  a  name  that  the 
people  could  pronounce  without  difficulty,  if  you  ask  them  to 
say  it. 

Another  thing:  Take  the  case  of  the  Reo  motor  car.  The 
name  "Reo"  means  nothing  in  English.  It  is  an  obvious  combi- 
nation of  the  initials  of  Mr.  R.  E.  Olds,  an  engineer  and  inventor 
well  and  favorably  known  here,  as  is  the  car  which  goes  under 
his  name.  When  you  take  that  car  to  the  Spanish-American  mar- 
ket you  are  asking  your  prospect  to  buy  a  car  named  "Murderer," 
"Criminal,"  "Assassin."  I  do  not  think  the  association  is  a 
favorable  proposition.  There  is  a  little  jest  there  which  helps  to 
advertise  it,  possibly,  after  the  habit  of  our  well-known  peace 
advocate  (laughter),  but  I  do  not  think  it  helps  much.  I  would 
find  out  that  my  name  was  pronounceable,  and  that  it  had  no 
secondary  significance. 

Let  me  state  another  case  to  you,  for  a  moment.  I  had  a 
prospective  client  once  who  told  me  that  there  was  nothing 
in  foreign  advertising ;  that  he  knew  it,  because  he  had  tried  it ; 
because  he  had  spent,  I  think  it  was,  $6,000  in  Argentina  trying 
to  popularize  a  line  of  toilet  goods  under  a  trade  name  com- 
pounded of  his  initials,  which,  unfortunately,  constituted  a 
simply  breath-taking  obscenity  in  Spanish.  It  was  awful!  I 
do  not  see  how  the  papers  dared  to  print  it.  (Laughter.)  He 
did  not  know  any  better,  and  the  translator,  with  his  eyes  on 
the  fifty  cents  a  hundred  words  that  he  was  going  to  get,  kept 
still;  because,  of  course,  he  hired  a  waiter,  or  somebody  of  that 
kind,  to  do  his  translation.  (Laughter.) 

Those  are  errors  which,  let  us  suppose,  a  man  who  knows 
anything  about  export  would  foresee  in  advance;  but  all  those 
were  people  who  were  more  or  less  successful  exporters.  That 
is  the  funny  part  of  it.  You  would  think  they  would  be  wise 
to  that  sort  of  thing  before  spending  their  money ;  but  they  were 
not.  Perhaps  you  will  not  be. 

418 


Advertising  in  Foreign  Trade 


Having  hit  on  a  good  field,  where  I  believed  there  was  likely 
to  be  a  demand  for  my  goods,  and  having  selected  a  name  that 
was  harmonious,  so  far  as  possible,  with  the  conditions  of  the 
language  and  speech  that  existed  in  that  field,  I  would  go  a  little 
further. 

Selection  of  Advertising  Mediums 

I  think  the  next  thing  to  do  would  be  to  write  down  to  the 
government  at  Washington,  the  Superintendent  of  Documents, 
and  send  him  a  quarter  for  a  copy  of  a  very  interesting  little 
book — I  think  the  title  is  "Foreign  Publications  for  Advertising 
American  Goods."  It  is  No.  10,  Miscellaneous  Series,  anyway. 
That  will  get  it.  That  is  a  book  compiled  by  consuls  all  over 
the  world,  and  gives  you,  at  a  glance,  the  name,  frequency  of 
issue,  roughly  the  nature  and  size  of  page,  the  advertising  and 
subscription  rates  and  the  amount  of  circulation  claimed  by 
practically  all  of  the  publications  in  nearly  every  country  of  the 
world.  There  are  a  few  unimportant  cities  not  included  in  it; 
but,  so  far  as  the  book  goes,  it  is  a  most  amazingly  comprehensive 
guide  to  foreign  publications.  I  do  not  think  an  export  desk 
should  be  without  it,  even  if  a  man  never  contemplates  doing 
any  foreign  advertising. 

That  much  accomplished,  I  should  look  over  the  papers  listed 
in  my  field,  and  write  to  my  agents  to  find  out  which  of  them 
promised  best. 

If  I  did  not  have  agents  down  there,  I  should  write  to  the 
consul  and  ask  his  advice  about  it.  It  is  a  simple  proposition; 
there  is  nothing  revolutionary  or  startling  about  it;  but  that  is 
what  I  should  do. 

Having  selected  my  publications,  I  should  be  up  against  the 
problem  of  copy  and  illustrations. 

The  Importance  of  the  Translator 

Here  is  one  thing  I  would  not  do :  I  would  not  turn  American 
copy,  even  if  prepared  by  the  most  expensive  of  American 
agents,  over  to  a  waiter  or  ex-blacksmith  to  be  translated  into 
the  language  of  the  country  I  was  going  to  run  it  in,  as  a  good 
many  people  have  done. 

Possibly  a  little  illustration  there  might  help.  There  was  a 
firm  here — I  think  it  has  been  five  or  six  years  ago  now — a 
certain  company  manufactured  a  very  popular  soft  drink.  The 
head  of  the  house  listened  to  the  export  expert,  and  decided  that 
he  wanted  to  go  after  foreign  trade,  and  that  Cuba  was  the  terri- 

419 


Seventh  Session — Wednesday  Afternoon 


tory  he  would  hit  first.  He  had  the  good  fortune  to  be  connected 
with  a  very  reputable  and  highly  efficient  American  advertising 
agency.  He  also  had  the  fortune  to  be  acquainted  with  one  or 
two  drug  exporters  here  in  New  York,  who  told  him  they  could 
place  the  goods  on  sale  with  a  good  many  Cuban  druggists  just 
as  soon  as  there  was  a  demand  for  it. 

He  did  not  stop  to  think  that  most  of  the  druggists  down 
there  do  not  sell  soft  drinks,  in  Cuba.  Anyway,  he  made  ar- 
rangements with  those  drug  importers  that  certain  correspond- 
ents of  theirs  in  Havana  would  accept  consignments  of  his  goods, 
advance  freight  and  charges  and  fill  the  orders  as  they  came  in,  on 
practically  a  consignment  basis;  subject,  however,  to  the  con- 
dition that  he  was  to  do  a  fixed  amount  of  advertising  in  Cuba, 
the  newspapers  being  specified.  He  told  his  agency  to  prepare  to 
place  a  campaign  of  advertising  in  these  newspapers. 

Cuba  is  not  very  far  away  from  here,  and  in  the  course  of 
time  he  shipped  the  goods,  showing  to  the  exporters  in  New  York 
that  he  had  contracted  for  this  amount  of  advertising,  and  in 
due  time  he  paid  the  bills;  but  that  was  all  that  happened,  until 
he  began  to  get  complaints  from  his  Cuban  correspondents  asking 
why  there  had  been  no  advertising  done.  He  insisted  that  he 
had  attended  to  the  advertising  and  that  it  had  been  done,  and  they 
denied  it;  said  that  they  had  never  seen  a  line  of  it. 

He  discovered  then  that  Cuba  was  only  a  day  or  two  away 
from  here,  and  he  thereupon  got  on  a  train  and  went  to  Key 
West  and  from  there  across  to  Havana  to  investigate  the  thing 
in  person. 

When  he  called  upon  the  importer  in  Havana,  the  man 
said,  after  several  uncomplimentary  remarks  concerning  the  ex- 
porter's veracity,  that  there  had  been  no  advertising. 

To  settle  the  case,  they  went  around  to  the  office  of  the 
newspaper  and  looked  up  the  files,  and  it  was  only  a  second  or 
two  before  the  man  spotted  a  familiar  electrotype  and  said: 
"There  are  my  ads." 

The  other  man  burst  ©ut  laughing.  He  said:  "So,  you 
are  the  Vine  of  ginger'  people,  are  you?  We  have  been  trying 
to  find  out  who  makes  that  stuff  for  months.  There  is  no 
address  given  in  the  'ad,'  you  notice.  We  have  gone  around 
to  the  papers  and  all  they  can  tell  us  is  that  the  stuff  is  made 
somewhere  in  the  United  States;  that  they  got  the  order  from 
an  advertising  agent.  We  wrote  up  to  the  advertising  agent 
and  he  says  he  never  heard  of  it." 

420 


Advertising  in  Foreign  Trade 


Subsequent  investigation  proved  that  the  advertising  agency, 
quite  innocently,  had  employed  a  cheap  translator  who,  anxious 
to  earn  the  money,  had  translated  the  name  of  the  product — 
which  suppose  we  call  "Peerless  Ginger  Ale" — and  had  made  it 
"Unrivalled  Wine  of  Ginger."  (Laughter.) 

That  is  how  foreign  advertising  gets  its  black  eye.  Nearly 
every  time  you  run  down  such  a  case  you  find  that  it  is  directly 
due  to  defective,  ignorant  or  poorly  executed  translations.  When 
it  is  not  due  to  them  it  is  due  to  some  ridiculous  misunderstand- 
ing of  the  conditions  in  the  country. 

I  remember  Mr.  Vedder's  historical  incident  of  the  man  who 
advertised  gas  engines  in  Brazil  with  the  pleasing  information 
that  they  were  positively  warranted  not  to  freeze.  (Laughter.) 
I  think  Mr.  Vedder  went  on  to  say  that  the  climate  of  Brazil 
made  the  hens  lay  hard-boiled  eggs  the  whole  year  round. 
Adaptability  to  People  and  Territory 

To  get  back  to  the  subject:  Having  avoided  the  grosser 
errors  in  the  preparation  of  the  advertising  copy  I  would  try  to 
make  the  description  fit  the  particular  people  and  the  particular 
territory  where  the  article  was  to  be  sold.  I  would  pick  out  the 
talking  point  which  would  fit  the  territory.  I  would  not  libel 
a  perfectly  good  gas  engine  which  was  going  to  be  advertised 
for  the  purpose  of  selling  it  in  Brazil  by  saying  that  it  was  war- 
ranted not  to  freeze;  but  I  would  say  something  else  that  might 
interest  the  Brazilians — that  it  was  light,  that  it  would  stand  up 
in  a  hot,  moist  climate,  that  it  was  simple  and  could  not  get  out  of 
order,  and  so  on. 

Then  I  think  I  should  hire  a  pretty  able  man  to  translate 
that  advertisement  for  me,  or,  better  still,  to  originate  it  in 
Portuguese,  Spanish  or  French,  or  whatever  the  language  in  ques- 
tion might  be,  instead  of  trying  to  economize  in  that  direction. 

I  want  to  say  that  in  all  foreign  advertising — and  remember 
that  advertising  includes  letters,  catalogues  and  pretty  nearly 
every  form  of  printed  matter  that  a  firm  issues — in  all  foreign 
advertising,  translation  economy  is  about  the  poorest  and  most 
expensive  economy  known  to  science. 

I  have  seen  more  expensive  campaigns  go  to  waste  because 
they  tried  to  save  a  few  dollars  in  the  matter  of  translation  than 
for  any  other  single  cause. 

The  Buying  of  Space 

Then  you  would  have  to  buy  space.  I  can  give  you,  in  ten 
words,  a  very  good  rule  for  handling  foreign  advertising,  and 

421 


Seventh  Session — Wednesday  Afternoon 


that  is  to  hire  somebody  who  knows.  That  is  far  and  away  the 
best  plan  of  meeting  this  problem,  like  many  others.  Unfor- 
tunately, not  all  of  us  can  hire  people  who  know,  and  we  can  not 
be  sure  that  they  do  know  when  we  have  hired  them.  I  am 
trying  to  attack  that  question  by  laying  down  a  practical  platform 
on  which  a  man  could  care  for  his  advertising  himself  without 
necessarily  fatal  results. 

Buying  space  in  most  foreign  countries — I  think  I  am  justi- 
fied in  saying  "most" — is  still  a  matter  of  bargaining.  It  depends 
upon  how  much  you  want  to  pay,  and  how  badly  the  publisher 
needs  your  business,  rather  than  on  a  determined  and  invariable 
rate  card,  as  in  this  country.  It  is  essentially  a  matter  for  an 
expert.  I  have  been  at  it  for  something  like  ten  years  now,  and 
every  now  and  then  I  call  myself  a  fool  because  I  have  paid  a 
rate  which  I  am  able  to  shade.  Unless  you  are  a  pretty  able 
buyer  you  are  going  to  pay  more  for  your  foreign  advertising 
than  you  ought  to  pay. 

There  is  a  point  in  connection  with  that  which  is  worth  re- 
membering, and  that  is  that  only  in  the  United  States  has  the  pub- 
lishing business  been  carried  to  a  point  at  which  advertising  is 
the  "tail  that  wags  the  dog."  Here  we  are  accustomed  to  make 
the  reader  a  present  of  the  publication ;  that  is,  to  charge  him  so 
little  in  comparison  with  what  the  publication  costs  that  it 
practically  costs  him  nothing,  and  to  charge  up  the  whole  cost  of 
the  periodical  to  the  advertiser.  Originally,  of  course,  advertis- 
ing was  purely  a  by-product,  and  was  sold  as  such ;  and  in  many 
foreign  countries,  particularly  in  Latin  America,  that  is  still  the 
case.  The  subscription  rates  are  high,  and  a  good  many  publica- 
tions would  subsist  without  advertising. 

Dollar  for  dollar  I  think  you  get  better  value  for  your  money 
in  advertising,  if  you  buy  wisely,  in  Latin  America  than  anywhere 
else  on  earth.  Still,  buying  is  always  ticklish  business  unless  you 
know  your  ground. 

Register  the  Trade  Mark 

That  is  about  as  far  as  the  campaign  needs  to  go.  I  ought 
to  say,  though,  that  after  I  had  picked  out  the  foreign  trade  name 
and  made  sure  that  it  did  not  shock  anybody's  sensibilities  I  should 
register  it.  I  cannot  forget  the  case  of  the  American  typewriter 
concern  which  spent  $6,000  in  the  city  of  Buenos  Aires  to  make 
its  new  name  popular,  and  then  paid  $10,000  to  the  trade-mark 
pirate  who  had  registered  the  name  before  they  got  around  to  it. 

422 


Advertising  in  Foreign  Trade 


I  think,  before  spending  any  money  in  making  that  name 
popular,  I  would  see  that  nobody  could  steal  it  as  soon  as  it  got 
worth  selling. 

I  have  no  particular  patience  with  that  form  of  export 
delusion  which  holds  that  as  soon  as  business  crosses  a  frontier 
it  undergoes  some  mysterious  chemical  change.  In  fact,  I  dislike 
the  word  "export"  and  the  word  "foreign"  in  connection  with 
business;  because  you  know  and  I  know  that  business  is  just 
business  everywhere  the  sun  shines.  It  differs  in  surface  details, 
but  it  obeys  the  same  basic  laws  everywhere,  and  that  is  nowhere 
truer  than  in  advertising. 

You  could  not  possibly  make  a  campaign  pay  here  in  the 
United  States,  with  the  best  agents,  all  the  money  you  wanted, 
the  very  best  publication  in  the  world,  unless  you  know  your 
prospect,  unless  you  know  the  conditions  under  which  that  pros- 
pect lives  and  moves  and  thinks;  unless  you  practically  are  one 
of  the  people  you  are  trying  to  sell. 

When  a  man  tries  to  sell  the  Argentinian  his  goods  without 
knowing  the  first  thing  about  the  Argentinian's  prejudices,  or  the 
conditions  under  which  he  lives,  he  is  simply  inviting  disaster, 
and  he  generally  gets  it.  You  have  got  to  know  your  prospect 
before  you  can  make  advertising  pay.  It  is  a  matter  of  probably 
the  most  intimate  kind  of  business  knowledge;  it  involves  a 
closer  acquaintance  with  the  prospect  than  any  other  commercial 
transaction. 

If  a  man  is  not  willing  to  acquaint  himself  with  his  field, 
with  the  people  in  it  and  the  way  they  live  and  their  institutions 
and  habits  and  speech,  he  had  better  stay  away  from  advertising 
that  costs  money.  Of  course  he  cannot  do  business  anyway  with- 
out using  the  kind  of  advertising  that  does  not  cost  money, 
that  he  cannot  buy  by  the  square  mile  or  by  the  yard  or  by  the 
thousand  circulars,  but  that  has  to  be  earned  by  honesty  and 
justice  in  dealing  over  a  course  of  years. 

Live  Up  to  the  Claims  of  Your  Advertising 

I  want  to  emphasize  that  point  again.  I  have  seen  a  good 
many  expensive  advertising  campaigns  going  to  waste  because 
somebody  saved  a  dollar  on  a  claim;  because  somebody  said: 
"Oh,  he  is  only  a  foreigner;  he  is  far  away.  He  will  never  sue 
us;  he  is  probably  a  crook,  anyway.  We  won't  allow  him  that 
breakage  claim" — after  a  man  had  proved,  in  the  course  of  years 
that  he  was  an  honest,  reputable  business  man. 

423 


Seventh  Session — Wednesday  Afternoon 


The  best  kind  of  advertising,  after  all,  is  the  kind  of  adver- 
tising that  grows  out  of  deeds.  I  tell  you  it  talks  a  whole  lot 
louder  than  the  most  eloquent  words. 

Anybody  here  who  has  ever  tried  to  buy  goods  abroad — not 
to  sell  them,  but  to  buy  them — knows  how  hard  it  is  to  get  them 
without  putting  up  the  money  before  he  ever  sees  the  goods. 
Even  when  he  is  dealing  with  Europe,  that  region  of  fabulously 
intelligent  exporters,  according  to  what  we  are  told,  he  will 
come  pretty  close  to  parting  with  his  money  before  he  gets 
his  goods. 

You  are  asking  the  foreigner  to  trust  you  a  whole  lot  more 
than  you  trust  him,  every  day;  I  do  not  care  how  liberal  your 
policy  is.  Even  if  you  give  him  credit,  he  is  counting  on  your 
honesty,  your  honor,  your  probity,  for  something  more  than 
money,  for  his  ability  to  fulfill  his  contracts,  for  his  own  business 
reputation,  which  is  just  as  precious  to  him  as  yours  is  to  you. 
If  you  were  trusting  a  man,  not  with  goods  but  with  real  money, 
if  you  were  trusting  that  man  with  your  business  reputation,  with 
your  reputation  for  fulfilling  your  contracts,  you  would  be  a  lot 
more  apt  to  judge  him  by  what  he  did  than  by  what  he  said, 
particularly  if  what  he  did  contradicted  what  he  said.  If  there 
was  a  contradiction  there  I  know  which  you  would  believe, 
and  which  I  would  believe,  and  which  any  sensible  human  being 
would  believe. 

If  you  are  going  to  influence  your  foreign  customer  by  ad- 
vertising you  have  got  to  make  the  printed  word  only  emphasize, 
only  strengthen  the  impression  already  created  in  his  mind  by 
your  deeds. 

I  thank  you,  gentlemen.      (Applause.) 


THE  CHAIRMAN  :  I  presume,  gentlemen,  that  when  you  have 
occasion  to  bring  anything  connected  with  our  business  to  the 
attention  of  the  government  you  are  usually  brought  more  in 
contact  with  the  Department  of  Commerce.  But  back  of  the 
Department  of  Commerce,  at  the  foundation  of  the  Department 
of  Commerce,  and  all  the  other  departments  of  governmental 
efficiency,  is  the  great  Department  of  State.  By  that  department 
treaties  must  be  conducted.  The  way  must  be  opened  by  the 
State  Department  for  the  commercial  relations,  as  well  as  all 
other  relations  of  the  people  of  this  country  with  other  countries. 

The  concern  of  the  national  administration  in  the  progress 
and  development  of  our  commerce  abroad — because,  as  the  last 

424 


The  Department  of  State  and  Foreign  Trade 

speaker  said,  I  prefer  to  use  the  word  "abroad"  rather  than  the 
word  "foreign" — its  concern  in  our  commerce  abroad  is  evi- 
denced by  the  presence  here  of  the  Foreign  Trade  Adviser  of  the 
Department  of  State,  and  I  will  interrupt  the  program  at  this 
point  to  introduce  to  you,  gentlemen,  Judge  William  B.  Fleming, 
who  represents  the  Department  of  State,  and  who  will  now 
address  you. 

Address  of  Hon.  William  B.  Fleming 

Foreign  Trade  Adviser,  Department  of  State 

MR.  FLEMING:  Mr.  Chairman  and  gentlemen  of  the  Con- 
ference :  I  want  to  make  my  acknowledgement  for  the  handsome 
way  in  which  I  have  been  presented  and  for  this  recognition,  Mr. 
Chairman,  by  this  great  body  of  so  humble  a  representative  of 
the  State  Department  as  I  am. 

I  want  to  express  the  thought  that  I  am  all  the  more  glad 
of  this  recognition  because  I  did  not  want  to  see  this  great  body 
put  upon  the  stage  the  great  play  of  Hamlet  with  the  part  of 
Hamlet  omitted;  and  I  think  the  State  Department,  gentlemen, 
occupies  largely,  in  our  import  and  export  commercial  field,  the 
part  that  Hamlet  occupies  in  the  play.  I  am  glad  to  see  this 
recognition  by  this  great  body  of  the  State  Department. 

I  recognize  that  I  am  under  limitations  both  as  to  time  and 
also  as  to  circumstances  and  relations,  because  this  is  an  inter- 
national conference,  and  there  are  some  things  that  I  might  have 
in  mind  to  say  that  would  not  be  appropriate  for  this  occasion; 
and,  moreover,  being  a  quasi-representative  of  the  State  Depart- 
ment, you  know  I  have  to  be  a  little  bit  on  my  Ps  and  Qs,  and 
therefore  I  have  hurriedly  dictated  to  a  stenographer  a  few 
thoughts,  the  transcript  of  which  has  just  this  moment  been 
handed  me  and  which  I  have  not  had  time  to  revise.  In  order 
that  I  may  not  fall  into  diplomatic  error  perhaps  you  will  permit 
me  to  read  what  I  have  to  say. 

I  have  been  requested  to  speak  in  answer  to  this  topic: 

What  the  Department  of  State  Should  Do  for  Our  Foreign  Trade 

In  order  to  understand  what  our  Department  of  State  should 
do  for  our  foreign  trade  it  will  be  necessary  to  know  something 
of  what  it  is  now  doing  for  that  trade. 

It  should  be  understood  at  the  outset  that  the  business  of 
taking  care  of,  extending  and  expanding  American  foreign  trade 

425 


Seventh  Session — Wednesday  Afternoon 


is  divided,  so  far  as  the  government  of  the  United  States  is  con- 
cerned, into  two  parts:  that  which  is  under  the  Department  of 
Commerce  and  that  which  is  under  the  Department  of  State.  The 
jurisdiction  of  the  Department  of  Commerce  is  essentially  in 
the  domestic  field  and  the  jurisdiction  of  the  Department  of  State 
is  essentially  in  the  foreign  field. 

There  is  the  most  perfect  cooperation,  gentlemen,  between 
these  two  departments,  and  I  am  happy  to  say  that,  so  far  as  I 
know,  there  is  no  friction  whatever  between  them,  although  at 
times  the  jurisdiction  of  the  one  might  seem  to  overlap  that  of 
the  other. 

The  Department  of  State  has  some  900  consuls  and  consular 
officers  located  in  some  500  headquarters  abroad.  The  principal 
business  of  these  officers  is  to  look  after  the  commercial  interests 
of  Americans.  They  make  careful  studies  and  critical  analyses 
of  our  import  and  export  trade  in  their  several  districts.  They 
search  out  the  resources,  industries  and  commerce  in  their  several 
fields.  They  report  the  possibilities  of  business  and  trade  op- 
portunities and  obstacles  in  the  way  of  the  expansion  of  American 
trade  and  suggest  the  means  of  overcoming  these  obstacles. 
They  make  a  study  of  the  customs  tariffs  and  customs  regulations 
of  the  country  in  which  they  are  stationed  and  the  effect  of  these 
on  American  trade,  and  transmit  copies  of  these  laws  and  regu- 
la'tions  .and  the  amendments  thereto.  They  report  all  cases  of 
discrimination  against  American  interests,  how  this  discrimination 
is  effected  and  the  policies  upon  which  the  discrimination  is 
based.  They  also  study  and  report  on  freight  rates,  of  railways, 
canals  and  oceans,  also  on  the  bounties  given  by  foreign  nations. 

They  also  study  and  report  on  wages  of  labor  and  other  items 
of  the  cost  of  manufacture  of  products,  and  the  prices  at  which 
manufactured  articles  are  sold  for  domestic  use.  They  work 
in  cooperation  with  the  American  ministers  and  ambassadors 
and  assist  these  officers  of  the  government  in  commercial  matters 
and  in  the  effort  to  correct  erroneous  customs  charges  and  to  pre- 
vent undue  detention  of  goods  and  ships.  Tradition  has  long 
given  to  the  consuls  a  certain  prestige  which  affords  them  an 
open  door  to  the  sources  of  information — doors  which  are  not 
accessible  to  purely  commercial  agents. 

The  information  gathered  by  these  officers  is  transmitted 
to  the  State  Department,  where  it  is  censored  and  then  trans- 
mitted to  the  Department  of  Commerce  for  analysis  and  for  dis- 
tribution to  American  manufacturers  and  exporters. 

426 


The  Department  of  State  and  Foreign  Trade 

You  will  understand  the  necessity  of  that  censoring,  because 
it  is  intended  to  keep  from  publication  anything  that  might  em- 
barrass the  government  in  its  foreign  relations. 

You  will  be  surprised  to  learn  that  in  normal  times  the 
entire  net  cost  of  this  great  consular  service  to  the  American 
government  is  only  about  $1,500,000  per  annum.  The  consulate 
fees  make  the  consulates  comparatively  nearly  self-supporting. 

The  Diplomatic  Service 

The  most  potent  power  exercised  abroad  in  behalf  of  Ameri- 
can exporters,  however,  rests  with  the  American  ambassadors 
and  ministers,  who  act  under  instructions  from  the  State  Depart- 
ment in  behalf  of  American  interests.  Through  them  the  com- 
plaints and  protests  and  point  of  view  of  American  concerns  are 
made  known  to  foreign  governments  and  the  protests  and  repre- 
sentations of  the  State  Department  in  behalf  of  trade  and  com- 
merce are  presented.  The  American  embassies  and  legations  are 
constantly  using  their  high  offices  in  aid  of  American  importers 
and  exporters. 

The  fact  that  the  interests  of  American  business  men  in  the 
foreign  field  are  largely  dependent  upon  the  officers  under  the 
control  of  the  State  Department  cannot  be  too  strongly  empha- 
sized for  the  reason  that  there  is  a  widespread  misapprehension 
in  regard  to  the  matter  in  the  minds  of  our  business  men  who  seem 
to  think  that  they  are  dependent  upon  the  Department  of  Com- 
merce rather  than  upon  the  Department  of  State. 

More  than  once  efforts  have  been  made  in  the  Congress  of 
the  United  States  to  transfer  the  consular  service  to  the  De- 
partment of  Commerce.  These  efforts  have  arisen  from  the  want 
of  proper  information.  Commercial  questions  are  so  interwoven 
with  political  and  diplomatic  questions  that  it  is  often  impossible 
to  separate  them.  Commercial  agents  in  foreign  fields  logically 
belong  to  the  Department  of  State  or  the  Department  of  Foreign 
Affairs ;  otherwise  the  country  is  liable  to  be  greatly  embarrassed 
in  its  international  relations.  The  fact  that  these  officers  are 
placed  under  the  control  of  the  Department  of  Foreign  Affairs 
by  all  the  great  nations  of  the  earth  ought  to  be  sufficient  to  satisfy 
the  average  mind  that  it  would  be  a  serious  mistake  to  divorce 
them  from  the  diplomatic  branch  of  our  government.  Moreover, 
merely  commercial  agents  would  not  have  the  opportunity  or 
the  facilities  for  gathering  the  information  needed  for  the  Amer- 
ican business  men.  The  customs  which  have  prevailed  from  time 

427 


Seventh  Session — Wednesday  Afternoon 


out  of  mind  and  which  still  prevail  in  foreign  nations  could  not 
easily  be  overcome,  and  it  would  be  an  unwise  and  hazardous 
experiment  to  separate  the  consular  force  from  the  diplomatic 
force.  This  was  the  view  of  Congress  after  full  consideration. 

I  might  add  that  all  the  great  diplomatic  representatives  of 
the  United  States  in  the  Senate  when  that  question  was  up,  in- 
cluding not  only  Mr.  Bacon,  Senator  Lodge,  Senator  Root  and 
other  men  of  that  class,  were  unanimously  of  that  opinion,  and 
so  expressed  themselves  upon  the  floor  of  Congress,  and  when 
their  views  were  thus  expressed  all  opposition  to  their  idea  im- 
mediately ceased,  because  no  one  could  undertake  to  answer  them. 

The  representatives  abroad  of  the  United  States  are  under 
the  control  of  the  Secretary  of  State  with  the  assistance  of  the 
Director  of  the  Consular  Service,  the  Assistant  Secretary,  the 
Solicitor,  the  Chiefs  of  the  Geographical  Divisions  and  the  For- 
eign Trade  Advisers  of  the  Department  of  State,  who  draft  most 
of  the  instructions  for  the  signature  of  the  Secretary. 

Now,  gentlemen,  this  brings  me  especially  to  call  to  your 
notice  the  office  of  Foreign  Trade  Advisers.  I  dare  say  that  most 
of  you  are  unfamiliar  with  that  office.  When  I  walked  into  the 
office,  to  be  greeted  by  my  predecessor,  Mr.  Pepper,  who  is  not 
unknown  to  some  of  you,  and  was  kindly  and  graciously  received 
by  him,  and  asked  him  what  the  jurisdiction  of  the  office  was,  he 
took  me  up  to  the  wall  and  showed  me  a  map  of  the  world  and 
said :  "There  is  your  jurisdiction."  And  so  I  began  to  be  initiated 
into  the  mysteries  of  the  office  of  Foreign  Trade  Adviser. 

The  Foreign  Trade  Advisers'  Office 

The  principal  bureau  in  charge  of  matters  of  foreign  trade 
in  the  State  Department  is  that  of  the  Foreign  Trade  Advisers. 
The  business  of  looking  after  our  foreign  trade  naturally  is 
centered  somewhere.  Formerly  it  was  centered  in  the  Bureau  of 
Trade  Relations,  which  bureau  has  evolved  into  the  Foreign 
Trade  Advisers'  office.  The  business  men  who  come  to  Washing- 
ton with  regard  to  foreign  trade  are  sent  to  that  office,  where 
they  confer  with  one  or  both  of  the  Foreign  Trade  Advisers.  The 
correspondence  of  these  business  men  is  also  referred  to  and 
handled  by  that  office.  The  Foreign  Trade  Advisers'  office 
stands  in  relation  to  the  Department  of  State  very  much  as  the 
Bureau  of  Foreign  and  Domestic  Commerce  stands  in  relation  to 
the  Department  of  Commerce.  The  Foreign  Trade  Advisers  act 

428 


The  Department  of  State  and  Foreign  Trade 

largely  as  the  representatives  and  agents  of  the  business  men  of 
the  United  States  in  relation  to  foreign  trade. 

Now,  gentlemen,  I  hope  you  will  appreciate  the  force  of 
that.  We  are  largely  your  representatives,  and  the  representa- 
tives of  all  the  other  business  men  of  the  country;  your  agents, 
your  servants,  to  look  after  your  interests;  and  the  latch  string, 
of  course,  is  always  on  the  outside,  and  you  will  receive  not  only 
welcome  but  all  the  advice  and  all  the  information  that  can  be 
afforded  in  that  office.  (Applause.) 

The  Foreign  Trade  Advisers,  however,  have  a  quasi-diplo- 
matic relation.  They  often  take  up  trade  matters  with  foreign 
embassies  at  the  capital. 

For  example,  they  have  cooperated  with  the  British  Embassy 
in  the  matter  of  bringing  forward  of  American-owned  goods  of 
"enemy"  origin.  They  have  initiated  through  the  Russian  Em- 
bassy the  negotiations  which  led  up  to  the  recent  protocol  agree- 
ment with  Russia  whereby  goods  of  Russian  origin  are  now  com- 
ing forward  to  the  United  States. 

Is  a  concession  from  a  foreign  government  desired  by  an 
American  concern?  Has  an  American  merchant  been  over- 
charged in  the  foreign  customs  office?  Has  he  been  discrimin- 
ated against?  Does  he  desire  information  from  abroad  in  re- 
gard to  his  business?  Is  he  in  trouble  anywhere  outside  of  the 
United  States  in  regard  to  his  business?  If  so  he  may  come  to 
the  Foreign  Trade  Advisers'  Office  for  conference  or  probably 
have  his  correspondence  handled  there. 

The  work  of  the  Foreign  Trade  Advisers'  office  is  now  di- 
vided into  two  parts ;  the  administrative  work  and  the  advisory  or 
constructive  work. 

It  is  in  this  latter  branch  that  the  important  questions  are 
first  considered  which  relate  to  the  great  fundamentals  touch- 
ing American  interests  in  the  foreign  field. 

It  is  here  that  those  questions  will  be  naturally  considered 
which  will  best  answer  the  question,  "What  the  Department  of 
State  should  do  for  our  Foreign  Trade."  In  answer  to  this 
question  it  is  suggested — 

(1)  That  the  State  Department  should  continue  the  admin- 
istrative work  along  the  lines  heretofore  existing. 

(2)  That  the  constructive  work  now  entered  upon  should  be 
vigorously  prosecuted. 

(a)  That  the  act  known  as  the  "Seamen's  Act"  should  at 
once  be  carefully  considered  and  the  Department  advised  as  to 

429 


Seventh  Session — Wednesday  Afternoon 


the  operation  of  the  Act  and  its  effect  upon  our  foreign  commer- 
cial treaties  and  relations  and  what,  if  any,  amendments  should 
be  recommended  to  Congress  in  relation  thereto. 

(b)  The  five  per  cent,  clause  of  the  Underwood  tariff  law 
should  be  studied  and  the  Department  properly  advised  with 
reference  to  our  treaties  and  commercial  agreements  and  com- 
merce. 

(c)  Perhaps  the  most  important  pressing  question  to  be  con- 
sidered by  the  Foreign  Trade  Advisers  is  that  of  our  commercial 
treaties  and  policies. 

I  have  my  views  as  to  what  action  should  be  taken  along 
that  line,  but  this  is  not  the  time  nor  the  place  for  the  submission 
of  those  views.  The  subject  is  a  far-reaching  one. 

To  meet  the  responsibilities  of  the  Herculean  task  of  the 
Foreign  Trade  Advisers  Congress  should  immediately  provide  for 
an  enlarged  force  in  the  Foreign  Trade  Advisers'  office,  so  that 
there  may  be  added  to  the  present  force  able  assistants  and  com- 
petent statisticians  and  clerks. 

Commercial  Agreements  and  Treaties 

Several  commercial  agreements  are  now  being  considered  by 
the  Department  of  State.  Other  commercial  treaties  may  come 
up  for  consideration  at  any  time.  After  the  end  of  the  European 
war  probably  it  may  become  necessary  to  negotiate  a  hundred 
commercial  treaties  or  at  least  material  amendments  to  existing 
treaties.  How  can  the  interests  of  the  United  States  be  taken 
care  of  in  this  great  work  in  which  the  future  business  interests 
of  Americans  are  involved  except  by  the  intervention  of  the 
State  Department,  and  how  can  the  State  Department  meet  this 
grave  responsibility  except  by  the  aid  of  a  bureau  properly  manned 
and  equipped  with  ability  to  make  the  necessary  investigations, 
gather  the  data  and  to  properly  advise  the  Department  and  make 
appropriate  and  timely  recommendations  and  do  the  necessary 
drafting  ? 

In  my  judgment  there  is  no  more  important  duty  now  resting 
upon  American  business  men  than  that  of  seeing  to  it  that  Con- 
gress provides  the  funds  so  that  this  bureau  may  be  properly 
organized  and  efficiently  equipped. 

In  my  judgment  we  are  in  a  state  of  unpreparedness.  We 
should  be  as  well  prepared  for  the  peaceful  war  which  we  must 
enter  upon  as  for  the  military  war  which  we  may  have  to  engage 
in. 

430 


The  Department  of  State  and  Foreign  Trade 

This  peaceful  war  must  be  entered  upon  in  the  spirit  of 
amity  and  good  will.  We  must  be  prepared  to  give  as  well  as  to 
take.  We  must  consider  the  other  fellow  and  the  other  fellow 
must  be  made  to  consider  us.  These  negotiations  must  rest  upon 
the  basic  rock  reciprocity,  and  that  upon  the  still  deeper  founda- 
tion of  the  principle  of  the  Golden  Rule,  which  is  the  great  moral 
law  of  the  world.  This  law  must  be  the  guide,  the  Polar  Star, 
if  the  work  done  is  to  endure. 

Thus  only  may  we  hope  to  safeguard  the  vast  and  the  ex- 
panding interests  of  the  greatest  and  most  successful  bodies  of 
business  men  on  earth — the  exporters  and  importers  of  the  United 
States. 

Now,  gentlemen,  I  have  had  my  little  say.  It  may  not  be 
worth  the  saying;  yet  I  hope  I  have  sown  the  seeds  of  some 
thoughts  that  may  find  lodgment  in  your  minds,  and  that  may 
result  in  a  fruitful  harvest. 

I  leave  this  body  and  this  Conference  with  a  most  satisfac- 
tory feeling.  I  know,  now,  of  no  better  work  that  I  can  en- 
gage in  than  coming  in  touch,  hand  to  hand  and  shoulder  to 
shoulder  and  heart  to  heart  with  the  great  business  men  of 
this  country,  whose  interests,  in  a  way,  are  committed  to  my  humble 
hands.  And,  gentlemen,  I  have  been  delighted  to  meet  you,  to 
see  you  and  know  you,  and  I  hope  I  shall  see  more  of  you  in 
the  future. 

I  shall  be  glad  to  see  any  of  you,  to  receive  any  suggestions 
or  advice  from  you  at  any  time  in  my  office,  or  at  any  other 
place  you  may  find  me. 

Gentlemen,  I  think  the  spirit  of  the  Department  of  State  is 
of  this  kind.  I  think  it  is  ready  to  reach  out  the  hand  to  you  and 
to  give  you  welcome,  with  the  view  to  protect  your  great  interests, 
and  I  hope  to  meet  other  bodies  like  this  and  to  receive  inspiration 
from  them,  in  order  that  I  may  go  forward  and  prosecute  the 
work  which  my  hands  find  to  do. 

Yes,  gentlemen,  I  am  delighted  to  have  seen  you  and  to 
have  met  you,  and  I  go  away  from  this  body  and  from  this  city 
somewhat  with  the  feeling  of  that  Arkansas  fellow  who  courted 
his  girl  for  some  seven  long  years,  but  never  had  the  courage 
to  ask  for  her  hand.  At  last  he  managed  to  screw  his  courage 
up  to  the  sticking  place  and  popped  the  question;  and  the  girl 
said:  "Jim,  why  didn't  you  ask  me  this  long  ago?  I  have  been 
waiting  for  seven  long  years  for  you  to  ask  me  that  question. 
Now  you  ask  me  whether  I  will  have  you  or  not,  and  of  course 

431 


Seventh  Session — Wednesday  Afternoon 


I  am  ready  to  say  'Yes.'  "  And  Jim  was  so  happy  that  he  went 
out  into  the  starlight  and  fell  upon  his  knees  and  lifting  up  his 
eyes  to  Heaven  said:  "Oh,  Lord,  I  now  ain't  got  nothing  agin 
nobody."  (Laughter  and  applause.) 


THE  CHAIRMAN:  With  your  permission,  gentlemen,  I  am 
going  still  further  to  interrupt  the  calendar  for  a  moment  to 
recognize  Mr.  Search,  who  has  a  matter  to  present  to  you  that 
I  think  will  meet  with  your  unanimous  acceptance. 

MR.  SEARCH  :  Mr.  President  and  gentlemen  of  the  Confer- 
ence: It  occurred  to  me,  while  sitting  here  this  morning,  that 
at  some  time  during  the  day  somebody  should  do  that  which  I 
have  concluded  to  do  myself,  not  having  heard  of  any  other  per- 
son ready  to  take  the  initiative. 

It  must  be  patent  to  all  of  you  that  this  Conference  has 
been  gotten  together  by  somebody  who  has  given  it  a  great  deal 
of  thought  and  who  has  put  a  great  deal  of  preparation  into 
the  work.  Otherwise,  things  could  not  have  moved  so  smoothly 
as  they  have  done,  with  no  friction  anywhere,  nothing  to  in- 
terrupt the  harmony  of  the  proceedings. 

As  you  wished  information  and  as  you  tried  to  get  it,  you 
found  everything  ready  at  your  hand. 

The  preparation  of  the  program  and  the  gathering  together 
of  the  speakers,  who  have  so  grealty  enlightened  us,  and  the 
preparation  of  the  banquet  last  night  and  the  beautiful  addresses 
that  were  given,  were  really  far  above  the  ordinary  on  such 
occasions.  Somebody  must  have  given  to  those  things  a  great 
deal  of  thought. 

The  President  of  this  Association  has  acknowledged  that 
there  is  a  great  deal  due  to  somebody,  and,  in  the  goodness  of 
his  heart,  has  given  out  the  name  of  the  man  to  whom  it  was 
due.  He  has  told  me  his  name.  He  believes  that  when  he 
places  confidence  in  the  people  who  are  under  him,  doing  the 
work  of  this  Association,  and  when  he  gets  the  people  to  know 
somewhat  who  they  are,  that  he  is  getting  greater  and  better 
service  all  the  time;  and  I  think  that  is  one  of  the  attributes  of 
a  great  general. 

I  am  fully  aware  of  the  fact  that  the  gentleman  to  whom 
I  am  going  to  allude  would  never,  by  the  slightest  hint,  give 
any  idea  that  he  thought  anything  of  this  kind  was  due  to  him. 
He  follows  the  Biblical  injunction  very  closely:  his  yea  is  yea 
and  his  nay  is  nay.  It  seems  to  me  that  he  follows  that  injunc- 

432 


Vote  o}  Thanks  to  the  Secretary 


tion  strictly,  and  that  he  believes  that  whatsoever  is  more  than 
these  comes  of  evil. 

Now,  gentlemen,  I  move  that  an  expression,  by  a  vote  of 
thanks  of  this  assembly,  be  given  to  Mr.  Benney,  who  has  en- 
gineered the  whole  program.  (Great  applause.) 

MR.  GREEN:  I  desire  to  second  that  motion,  and  I  suggest 
a  rising  vote  on  that. 

THE  CHAIRMAN:  You  have  heard  the  motion,  gentlemen. 
Are  there  any  further  remarks  to  be  made  on  that?  If  any  of 
you  desire  to  say  anything,  the  time  will  be  granted.  All  in 
favor  of  the  motion  will  signify  it  by  rising. 

(The  motion  was  adopted  by  an  unanimous  rising  vote.) 

MR  COWLES:  Before  this  meeting  adjourns,  Mr.  Chairman, 
I  would  like  to  say  a  word  with  reference  to  a  suggestion  made 
by  my  friend  the  Foreign  Trade  Adviser  of  the  Department  of 
State,  and  that  is  in  regard  to  our  foreign  parcel  post.  I  will 
say  what  I  want  to  say  to  you  in  five  minutes. 

THE  CHAIRMAN  :  We  are  not  quite  ready  to  adjourn  yet. 
We  will  try  to  make  time  for  that  hereafter. 

MR.  COWLES:  My  friend,  Judge  Fleming,  suggested — 

THE  CHAIRMAN:  That  is  not  in  order  just  at  this  moment, 
Mr.  Cowles. 

Mr.  Benney,  the  Chairman  would  like  to  have  something 
to  say  in  connection  with  the  rising  vote  of  thanks  which  has 
just  been  tendered  to  you,  although  it  is  not  supposed  to  be  the 
province  of  the  Chairman  to  address  the  Conference.  I  wish  to 
say  that  it  gives  me  the  greatest  pleasure  to  convey  to  you  the 
unanimous  sentiment  which  has  been  expressed  in  this  motion. 

MR.  BENNEY:  Mr.  Chairman  and  gentlemen:  This  surely 
was  not  on  the  program,  and  I  am  certainly  not  prepared  to 
respond  to  the  generous  vote  of  thanks  which  you  have  been  so 
kind  as  to  tender  to  me  personally,  but  I  wish  to  reply,  not 
only  personally,  but  on  behalf  of  those  who  as  you  must  know 
have  been  cooperating  with  me  in  the  making  up  of  this  program. 

I  particularly  wish  to  mention  Mr.  Gonzales.  (Applause.) 
You  have  heard  Mr.  Gonzales,  and  you  know  something  of  Mr. 
Gonzales'  quality  as  a  speaker  himself,  and  as  an  authority  on 
the  subject  upon  which  he  has  spoken ;  but  you  may  not  know 
that  he  has  been  cooperating  in  this  work  strenuously,  night  and 
day,  for  many  weeks,  and  it  is  largely  due  to  his  knowledge  of 
affairs,  to  his  knowledge  of  persons  and  their  ability,  and  his  tact 
in  selecting  speakers  that  the  program  is  as  good  as  you  have 
been  kind  enough  to  say  it  is. 

433 


Seventh  Session — Wednesday  Afternoon 


If  I  do  not  mention  others  of  the  staff  it  is  not  because  they 
do  not  deserve  commendation,  but  because  it  has  not  been  nec- 
essary to  call  upon  them  to  the  same  extent,  and  moreover  would 
practically  mean  naming  all  of  the  officers  and  large  staff  of  the 
National  Association  of  Manufacturers.  They  have  all  rendered 
faithful  and  enthusiastic  service  when  called  upon. 

But  the  gentlemen  of  one  committee,  I  think,  should  come 
in  for  this  vote  of  thanks :  Mr.  Wyman,  Mr.  Gregory  and  Mr. 
Keough.  They  have  gotten  up  a  unique  exhibit,  I  think  we  may 
call  it,  and  it  is  well  worthy  of  study.  It  has  been  very  well 
styled  an  educational  exhibit — so  much  so  that  I  find  we  have 
a  number  of  applications  to  have  this  exhibit  shown  at  different 
commercial  centers  throughout  the  country.  I  believe  we  have 
Colonel  Pope's  permission  that  that  shall  be  done,  so  that  after 
our  sessions  here  are  finished,  if  there  are  any  commercial  bodies 
that  would  like  to  have  that  exhibit,  if  they  will  send  in  their 
applications  they  will  be  considered  in  due  order. 

But,  gentlemen,  if  we  personally  are  entitled  to  a  little  credit 
for  this  work,  you  must  realize  that  nothing  could  be  accom- 
plished without  the  cooperation  of  a  great  organization.  We  are 
fortunate  in  having  a  president  in  the  person  of  Colonel  Pope, 
who  has  been  not  only  sympathetic  but  cordial  in  his  cooperation 
and  active  in  his  encouragement  to  go  ahead  and  make  the  Con- 
ference a  success.  And  back  of  him  is  the  great  business  organ- 
ization of  the  National  Association  of  Manufacturers,  which,  as 
all  of  you  should  know,  embraces  all  the  manufacturing  States  of 
the  country  in  its  membership  and  is,  moreover,  international  in 
its  influence,  the  extension  of  which  influence  beyond  our  borders 
began  under  President  Search  himself. 

It  is  gratifying  to  us  all  to  have  you  think  this  Conference 
has  been  a  success  and  that  our  work  has  therefore  not  been  in 
vain.  We  have  tried  to  make  the  Conference  truly  international 
— not  a  selfish  national  assembly,  but  one  in  which  representa- 
tives of  all  peoples  and  lands  might  get  together  and  aid  in 
cultivating  that  mutual  good  will  on  which  all  true  commerce 
must  rest.  I  thank  you.  (Applause.) 

MR.  PHILLIPS:  I  rise  to  suggest  three  rising  cheers  and  a 
tiger  for  Mr.  Benney. 

(Three  cheers  and  a  tiger  were  given  for  Mr.  Benney.) 

MR.  BENNEY  :  I  call  for  three  cheers  for  Mr.  Gonzales.  He 
certainly  deserves  them. 

(Three  cheers  were  given  for  Mr.  Gonzales.) 

434 


Cooperation  in  Foreign  Trade  Development 

THE  CHAIRMAN:  Gentlemen,  after  this  very  pleasant  diver- 
sion, we  will  return  to  business. 

In  a  number  of  the  addresses  to  which  we  have  listened 
reference  has  been  made  to  the  situation  of  the  American  manu- 
facturer or  the  American  merchant  who,  from  some  limitation  of 
capital  or  otherwise  in  his  business,  does  not  feel  justified  in 
undertaking  an  individual  enterprise  in  export  business,  but  who 
desires  to  make  a  beginning,  or  who  desires  to  branch  out,  having 
made  a  beginning.  The  question  of  how  he  could  so  do  has  been 
a  very  important  one,  and  has  been  noted  by  several  speakers; 
how  he  should  be  able  to  do  his  export  business  through  combin- 
ation, cooperation  with  others  who  were  similarly  situated;  be- 
cause sometimes  two  or  three  or  more  in  combination  can  accom- 
plish that  which  one  alone  would  not  accomplish  with  limited 
means  or  limited  facilities. 

This  part  of  the  subject  of  developing  a  foreign  commerce 
will  now  be  presented  by  one  who  has  had  a  long  experience  in 
handling  the  export  trade  for  a  number  of  manufacturers  com- 
bined for  that  purpose,  and  therefore,  we  will  listen  to  his  re- 
marks with  very  much  interest. 

I  take  great  pleasure  in  introducing  Mr.  H.  C.  Lewis,  gen- 
eral manager  of  the  National  Paper  and  Type  Company,  of  New 
York.  Mr.  Lewis.  (Applause.) 


Cooperation  in  Foreign  Trade  Development 

By  HARRISON  C.  LEWIS, 

General  Manager,  National  Paper  &  Type  Company,  New  York 

Cooperation  has  been  widely  written  about  and  variously 
tried,  sometimes  with  success,  but  more  often  with  failure.  Theo- 
retically cooperative  policies  are  ideal,  but  practically  they 
have  rarely  worked  out.  Failures,  however,  have  very  generally 
resulted  from  lack  of  regard  for  the  vital  human  element  of 
selfishness.  In  most  cases  the  individual  management  has  not 
been  given  an  opportunity  of  profiting  through  successful  service 
to  the  organization.  With  prospect  of  profit  or  benefit  to  the 
few  upon  whom  leadership  and  responsibility  rest,  the  many  may 
be  benefitted.  Cooperation  can  reach  its  highest  efficiency  only 
when  the  men  who  give  their  best  efforts  to  its  management,  add- 
ing their  own  ripe  intelligence  and  experience  to  the  united  pur- 
pose and  the  investment  of  the  concerns  interested,  are  allowed 

435 


Seventh  Session — Wednesday  Afternoon 


to  share  in  the  results  to  which  they  have  contributed.    In  other 
words,  to  be  successful  cooperation  must  cooperate. 

Desirable  Factors 

Many  of  our  manufacturers  need  cooperation  in  foreign 
trade,  and  its  results  will  help  our  country,  but  we  should  favor 
cooperation  or  combination  only  if  it  will  produce  economy,  ef- 
ficiency and  greater  profits.  All  of  these  results  will  bring  bene- 
fit to  the  United  States  as  a  whole,  but  to  work  out  such  a  policy 
selfishness,  which  may  be  simply  another  term  for  ambition,  and 
which  may  also  be  termed  a  by-product  of  energy,  must  be  rec- 
ognized and  fairly  dealt  with. 

The  selfishness  to  which  I  am  particularly  referring  is  the 
legitimate  desire  of  the  management  of  a  successful  business 
to  share  in  the  results  of  its  work.  With  this  prospect  insured, 
the  management  has  a  greater  incentive  to  push  the  enterprise  to 
its  full  development,  and  in  the  lack  of  this  lies  the  weakness  of 
many  cooperative  attempts. 

Taking  Reasonable  Chances 

Let  me  suggest  that  four,  or  six  or  eight  manufacturers, 
having  lines  more  or  less  allied,  get  together  and  employ  a  good 
man  to  represent  them  in  certain  territory  abroad.  Make  a  fair 
arrangement  with  him  on  salary  and  commission  basis,  and  ad- 
vance some  money  for  his  preliminary  expenses,  and  possibly 
necessary  investments.  Let  each  put  up  one,  two,  or  five  thousand 
dollars,  and  take  a  chance  on  results.  It  has  been  very  justly 
said  that  no  one  can  succeed  in  foreign  trade  without  imagina- 
tion and  a  certain  willingness  to  take  the  adventurer's  chance. 
With  judgment,  ability  and  foresight  the  dangers  are  no  greater 
than  in  this  country,  and  the  rewards  should  be  better.  Great 
fortunes  have  already  been  made  by  Americans  in  foreign  trade, 
and  greater  ones  will  be  made  in  the  future.  If  you  will  select 
the  right  man,  and  if  you  have  goods  in  demand  abroad,  you 
can  succeed  if  you  will  play  the  game  properly,  but  to  play  the 
game  you  must  first  risk  some  expense  or  investment.  You  must 
also  give  the  man  or  men  in  charge  of  your  foreign  business  an 
opportunity  of  making  a  good  thing  if  they  succeed.  Personally, 
I  favor  paying  men  in  charge  of  foreign  trade  fair  salaries,  and 
giving  them  an  interest  in  the  profits. 

Selecting  the  Right  Man 

After  agreeing  among  yourselves  that  you  will  get  together, 
the  first  important  thing  is  to  select  the  right  man  to  represent 

436 


Cooperation  in  Foreign  Trade  Development 

you.  This  is  not  easy,  but  it  is  not  so  difficult  as  it  would  seem 
to  the  uninitiated.  We  ouglit  to  have  in  this  country  a  Bureau 
where  the  manufacture  unacquainted  with  foreign  business  and 
the  salesman  or  potential  manager  who  has  had  experience  abroad 
may  get  together.  A  potential  manager  is  to  be  desired  before 
even  a  successful  salesman.  Managers  are  rather  few,  and 
salesmen  can  be  obtained. 

Trial  Territory  Should  Not  Be  Too  Large 

Having  secured  your  representative,  then  determine  upon  the 
territory  you  first  wish  to  cultivate,  and  do  not  make  that  territory 
too  large.  Try  it-  out  thorougly,  and  increase  your  business, 
and  possibly  your  investments,  as  conditions  warrant.  Arrange 
to  place  moderate  stocks  in  the  territory  covered  as  soon  as  there 
seems  to  be  a  present  demand.  Increase  those  stocks  as  regu- 
larly and  rapidly  as  increased  business  warrants.  Make  your 
management  responsible  for  credits,  for  collections  and  for  profits. 

Undesirability  of  Commissions  Solely 

I  am  rather  strongly  opposed  to  paying  a  foreign  representa- 
tive entirely  on  a  commission  basis.  The  temptation  to  make 
a  commission  may  lead  to  unwise  sales,  and  the  temptation  to 
increase  his  compensation  by  taking  on  other  lines  is  almost  in- 
evitable. Make  him  work  solely  for  you,  and  make  it  worth  his 
while  to  do  so.  Put  your  goods  in  at  the  smallest  possible  manu- 
facturing profit,  and  keep  an  interest  in  the  selling  organization 
so  that  you  share  in  its  gains.  As  soon  as  your  foreign  business 
shows  success,  interest  your  friends  and  neighbors  in  the  capital 
of  the  selling  organization  so  that  you  as  manufacturers  may 
not  have  to  carry  the  entire  capital  burden,  and  also  increase 
in  this  manner  a  more  general  interest  in  foreign  trade  and 
foreign  affairs  among  our  people. 

I  have  said  before  that  we  shall  not  become  a  great  export- 
ing nation  until  our  smaller  manufacturers  have  greater  oppor- 
tunities for  developing  a  foreign  trade,  and  until  the  people  of  the 
country  as  a  whole  realize  more  of  the  benefits  of  an  export  busi- 
ness. When  the  manufacturer  of  the  Middle  West  has  a  foreign 
trade,  and  has  interested  his  friends  in  it,  he  and  they  will  realize 
its  advantages  and  possibilities.  When  the  moderate  sized  shop 
can  employ  ten  or  twenty  or  more  additional  workmen,  due  to 
this  foreign  demand,  the  working  men  will  realize  its  importance 
and  work  for  it. 

437 


Seventh  Session — Wednesday  Afternoon 


Competing  Concerns  May  Unite  in  Foreign  Selling  Agencies 

There  seems  to  be  no  good  reason  why  competing  concerns 
should  not  unite  in  joint  selling  agencies  abroad.  They  can  save 
by  greater  economies  and  can  profit  by  greater  efficiency.  Another 
important  feature  is  in  their  ability  to  place  orders  most  econ- 
omically and  advantageously.  One  mill  or  factory  may  need 
business  for  the  time  being,  while  another  does  not.  One  mill  or 
factory  may  be  so  situated  as  to  command  a  lower  freight  rate  to 
a  certain  port  than  another.  One  may  be  able  to  ship  more 
promptly,  or  another  may  be  equipped  to  manufacture  the  par- 
ticular order  most  advantageously.  It  all  means  greater  benefit 
and  profit  for  our  people,  and  this  helps  our  country  as  a  whole. 

All  Partners  Should  Bear  Risks  Equally 

It  is  impossible  practically  to  arrange  or  agree  to  allow  any 
concern  to  come  into  a  cooperative  or  combined  selling  organiza- 
tion at  any  time  it  chooses.  If  this  is  attempted  the  people  of 
enterprise  must  first  run  the  risk,  and  then  share  their  success 
with  those  who  have  not  been  willing  to  incur  expense  or  risk  in 
the  beginning.  There  need  be  no  discrimination  against  equal 
enterprise  and  ambition,  but  there  should  not  be  ultimate  dis- 
crimination against  those  who  show  the  pioneer's  enterprise  and 
ambition. 

The  Golden  Rule  does  not  prevail  in  export  business,  and  we 
must  meet  conditions  as  they  have  been  created  by  others.  To 
do  this  every  possible  legitimate  advantage  should  be  given  us. 
Our  young  men  must  be  encouraged  to  go  abroad  and  creditably 
represent  our  factories  and  our  people.  They  must  be  made  to  feel 
proud  of  their  American  citizenship,  and  always  proud  of  the 
goods  they  have  to  sell  and  the  business  methods  of  their  em- 
ployers. 

Cooperation  Must  Include  All  Classes 

We  need  this  cooperation  not  only  among  ourselves  but  in 
Washington.  Combined  effort  on  the  part  of  our  manufacturers, 
of  our  citizens  and  our  workingmen  will  bring  efforts  in  Wash- 
ington which  will  greatly  help  in  the  development  of  our  over- 
sea trade.  The  demand  is  not  yet  insistent  enough  to  bring  this 
about,  and  unfortunately  we  seem  to  have  few  in  high  places  who 
sufficiently  understand  the  possibilities  or  needs  of  this  line  of 
business.  I  believe  that  cooperation  in  educating  our  people  at 
home  in  foreign  affairs  is  almost  as  much  needed  as  cooperation 
in  selling  abroad  on  the  part  of  our  manufacturers.  Even  now 

438 


Cooperation  in  Foreign  Trade  Development 

we  can  imagine  the  result  if  the  concerns  here  represented  should 
send  a  large  and  highly  qualified  committee  to  Washington  to  ex- 
plain with  patience  and  in  detail  the  needs  of  the  manufacturer 
and  merchant  in  respect  to  foreign  trade.  Had  it  been  possible 
to  convince  our  last  Congress  of  the  full  need  of  an  American 
merchant  marine,  and  of  the  quick  and  sure  way  to  obtain  it 
on  safe  and  sane  lines,  there  is  no  doubt  that  we  should  today 
have  a  large  number  of  merchant  ships  carrying  our  commerce, 
and  that  the  present  transportation  difficulties  would  be  greatly 
relieved. 

Government  Ownership  Not  Cooperation 

Government  ownership  of  steamship  lines  is  not  cooperative. 
Subsidies  in  a  sense  represent  cooperation.  With  prospective 
government  ownership  of  certain  steamship  lines,  against  which 
no  private  concern  can  successfully  compete,  and  for  which  our 
people  must  pay  dearly,  we  may  imagine  what  European  lines  will 
do  to  our  commerce  until  such  time  as  our  government  ships  are 
actively  in  service.  We  can  safely  count  on  being  almost  fatally 
handicapped  for  from  one  to  three  years,  and  of  losing  the  advan- 
tages and  the  trade  which  have  come  to  us  in  the  past  year.  That 
possibility  seems  to  me  even  more  serious  than  are  the  present 
conditions,  and  certainly  they  are  bad  enough. 

We  must  recognize  the  fact  that  the  Eastern  seaboard  is 
the  proper  place  for  handling  export  business.  The  goods  may 
be  manufactured  anywhere  in  the  country  if  freight  rates  will 
permit  delivery  at  the  seaboard  at  reasonable  cost.  To  this  end, 
by  the  way,  lower  freight  rates  on  export  shipments  to  the  sea- 
board should  be  permitted.  It  will  help  our  country  and  should 
increase  the  revenues  of  our  railroads  to  an  extent  that  will  in 
the  end  be  profitable.  There  are  mills  in  the  Middle  West  whose 
products  can  be  sold  to  great  advantage  abroad,  but  which  cannot 
under  existing  tariffs  bring  their  goods  to  the  seaboard  at  a  cost 
that  makes  it  profitable  for  them  to  sell  in  the  foreign  market.  A 
reasonable  reduction  in  freight  rates  would  enable  them  to  com- 
pete. 

Advantages  of  Proximity  to  Seaboard 

The  concern  having  its  headquarters  in  New  York  or  other 
cities  on  the  coast  available  for  effective  shipping  has  an  oppor- 
tunity of  buying  which  the  concern  situated  inland  does  not  always 
enjoy.  It  has  a  better  opportunity  of  meeting  foreign  buyers 
when  they  come  to  this  market,  and  it  can  generally  watch  shipping 
conditions  and  make  shipping  contracts  which  will  be  advan- 

439 


Seventh  Session — Wednesday  Afternoon 


tageous  and  put  them  in  the  competitive  class.  On  many  com- 
modities a  moderate  difference  in  ocean  transportation  rates  means 
the  taking  or  losing  of  an  order,  or  means  profit  or  loss  on  the 
transaction.  The  large  shipper  gets  his  special  rates  because  he 
can  guarantee  a  regular  fixed  tonnage.  The  irregular  and  modest 
shipper  cannot  do  this.  There  are  agencies  which  handle  general 
shipments  with  considerable  advantage,  but  they  are  rarely  able 
to  handle  specific  articles  of  moderate  tonnage  as  well  as  the  or- 
ganized company  can  do  on  its  own  products. 

Cooperation  and  Combination 

Our  great  companies  can  afford  to  establish  their  own  branches 
abroad  and  create  for  themselves  export  departments  which  are 
ably  managed.  They  can  organize  their  own  export  companies 
and  run  them  without  selling  profit,  but  for  the  general  benefit  of 
their  own  factories.  This  plan  has,  I  know,  been  worked  out  very 
successfully  by  some  of  our  very  large  corporations,  but  in  my 
judgment  the  plan  does  not  meet  the  needs  of  the  manufacturer 
with  a  moderate  or  small  export  business.  His  volume  is  not 
sufficient  to  enable  him  to  work  alone  with  profit  and  the  combined 
volume  of  a  number  of  manufacturers  having  entirely  independent 
plants  and  making  different  goods  is  not  sufficient  to  be  handled 
in  the  same  way  that  the  large  manufacturer  uses.  Conditions 
are  different,  and  different  methods  are  needed.  As  a  country 
we  must  have  more  export  business  if  we  are  ever  again  to  be 
highly  prosperous.  To  get  this  export  business  in  a  way  that  will 
bring  prosperity  we  want  the  right  to  cooperate  on  non-competi- 
tive or  competitive  lines,  or  to  combine  for  the  sale  of  our  prod- 
ucts abroad  and  for  the  purchase  of  foreign  goods.  We  need 
above  all  legitimate,  sane  and  consistent  encouragement  for  our 
men  who  go  abroad  and  live  there  for  the  benefit  of  our  whole 
country.  We  must  never  forget  that  the  prosperity  of  a  single 
concern  engaged  in  foreign  trade  brings  some  added  prosperity  to 
our  entire  country.  It  means  the  bringing  of  foreign  money  here. 
It  means  the  ultimate  investment  of  our  capital  in  foreign  lands 
and  its  use  in  the  development  of  countries  and  in  their  purchase 
of  our  own  merchandise.  It  means  the  payment  of  interest  and 
dividends  to  us  instead  of  our  payment  abroad.  It  means  the  em- 
ployment of  countless  men  in  office  work,  in  shops,  on  railroads, 
and  in  time,  let  us  hope,  in  shipping.  Let  us  preach  the  gospel 
of  foreign  trade  for  all  who  have  enterprise  and  ambition  to  se- 
cure it. 

440 


The  American  Salesman  Abroad 


THE  CHAIRMAN:  The  American  salesman  abroad  has  been 
the  subject  of  many  papers  and  addresses  and  lectures  and 
criticisms:  and  whatever  may  have  been  his  shortcomings  we 
know  that  it  is  he  whom  we  must  all  ultimately  rely  upon  to 
dispose  of  our  product.  Mr.  Reed,  who  will  speak  to  us  on  this 
subject,  is  a  gentleman  who  has  himself  been  an  American  sales- 
man abroad  for  many  years  and  is  well  qualified  to  address  us 
on  that  topic. 

I  have  great  pleasure  in  introducing  Mr.  Reed. 

The  American  Salesman  Abroad 

By  Louis  C.  M.  REED, 

Of  the  Chamber  of  Commerce  of  the  United  States. 

MR.  REED  :  Mr.  Chairman  and  gentlemen :  When  I  was  in 
Indianapolis  last  week  Mr.  Theodore  Randall,  secretary  of  the 
National  Brick  Manufacturers'  Association,  was  good  enough  to 
ask  me  to  address  the  National  Brick  Manufacturers  at  their 
coming  convention.  I  told  Mr.  Randall  that  I  should  be  honored 
provided  the  National  Brick  Manufacturers  did  not  bring  any 
of  their  product  to  the  banquet  when  I  spoke.  (Laughter.)  I 
felt  it  safer  to  make  this  stipulation.  (Laughter.)  I  once  ad- 
dressed an  egg  merchants'  association.  (Laughter.)  It  is  one 
thing,  you  know,  to  be  covered  with  honor — (laughter) — but 
you  have  the  rest  of  it.  (Laughter.) 

I  feel  no  trepidation,  however,  to  speak  of,  in  addressing 
you  men  here  this  afternoon,  because  the  business  which  has 
brought  you  together  is  my  business,  too.  The  export  trade  is 
my  game,  and  until  the  war  drove  me  back  to  my  own  country 
I  had  spent  most  of  the  past  ten  years  in  twenty-five  countries 
of  the  world  organizing  American  business;  and  I  may  qualify 
that  word  "organizing"  by  saying  that  I  was  selling  goods;  be- 
cause it  is  one  thing  to  organize  a  trade  and  it  is  another  thing 
to  sell  goods.  The  only  well  organized  Trade  is  the  Trade  that 
is  buying  your  goods.  Besides,  I  feel  at  home  because  I  have 
run  across  a  great  many  of  my  friends  at  this  meeting  whom  I 
have  met  in  various  parts  of  the  world;  and  we  have  all  got 
together  and  decided  that  we  would  not  mention  anything  here 
on  this  side  as  to  what  we  used  to  do  on  that  side  (laughter),  so 
we  hope  to  get  along.  (Laughter.)  Among  these  friends  is  my 
friend  George  Coleman,  sitting  back  there,  whom  I  last  saw,  I 
think  it  was  in  1910,  in  Durban,  South  Africa.  Coleman  came 
over  on  a  tramp  steamer  from  Australia.  He  had  been  on  the 

441 


Seventh  Session — Wednesday  Afternoon 


Pericles.  I  believe  it  was  not  submarined,  but  it  struck  an  un- 
charted rock,  and  I  never  knew  what  a  tramp  steamer  was  until 
I  saw  Coleman  come  into  Durban  that  day.  (Laughter.) 

Mr.  Coleman  met  me  last  night  and  he  said : 

"Reed,  if  you  will  come  up  to  my  room  tomorrow  morning, 
I  will  tell  you  everything  that  has  been  said,  so  that  you  won't 
say  the  same  thing  over  again;  because  it  is  going  to  be  hades 
if  I  have  to  sit  and  hear  you  tell  the  same  thing  that  has  been  told 
better  by  somebody  else."  (Laughter.)  But  I  want  to  say,  gentle- 
men, on  that  question,  that  what  has  been  said  by  somebody 
else — and  I  only  arrived  last  night,  so  that  I  do  not  know — 
but  I  will  guarantee  that  that  same  thing  has  been  said  by  some- 
body else  for  twenty  years;  and  that,  up  to  the  present  day, 
very  few  American  manufacturers  have  profited  by  it — compara- 
tively few. 

I  believe  there  are  no  new  theories  in  regard  to  working  the 
foreign  trade,  or  the  export  trade,  because  I,  like  the  others,  pre- 
fer to  use  the  word  "export"  rather  than  "foreign" ;  there  are  no 
new  theories,  so  far  as  I  know.  They  are  the  old  theories,  but  you 
must  keep  pounding  on  them  all  the  time,  and  one  by  one  you 
will  get  the  American  manufacturers  interested. 

I  am  one  of  those  men  who  do  not  believe  we  ought  to 
jolly  one  another  and  tell  what  a  great  nation  we  are,  and  what 
great  salesmen  we  are;  because  it  is  enough  when  we  jolly  our- 
selves into  the  belief  that  we  are  hustlers.  When  we  get  abroad 
the  first  thing  we  do  is  to  criticize  everybody  for  their  lack  of 
speed ;  and  then  when  we  are  there  a  while  we  take  a  look  at  our 
own  speedometer,  and  it  does  not  register  very  well.  Look  at 
us  when  we  get  away  from  our  own  boss  into  the  foreign  field — 
and  look  at  our  own  boss  when  he  gets  away  from  us  into  the 
foreign  field.  (Laughter.) 

I  am  one  of  those,  also,  who  believe — I  think  it  was  Mr. 
Kahler  who  voiced  this  same  thought  in  his  splendid  address  on 
advertising — that  there  is  nothing  mysterious  or  occult  at  all 
about  foreign  or  export  business.  I  do  not  know  who  started  that. 
I  do  not  know  whether  it  was  some  of  my  brother  salesmen  who 
wanted  to  make  out  that  every  sale  was  like  firing  for  22  knots  in 
a  ship's  stokehole,  when  it  might  have  been  like  peeling  a  ripe 
banana,  or  whether  it  was  started  by,  perhaps,  some  of  our  good 
friends,  the  exporters;  but  it  is  not  mysterious  or  mystic  or 
occult  at  all,  and  the  same  common  sense  you  use  in  your  domestic 
trade  should  be  applied  in  the  development  of  export  business. 

442 


The  American  Salesman  Abroad 


The  longer  I  traveled  in  foreign  countries  the  more  I  became 
convinced  that  the  essential  thing  that  is  required  is  an  under- 
standing of  life,  if  I  may  use  the  term,  an  understanding  of 
human  nature;  and  that  thing  called  the  psychology  of  the  sale, 
gentlemen,  is  a  more  important  thing  than  anything  in  the  selling 
world.  That  is  the  big  thing. 

Now,  gentlemen,  I  don't  want  to  be  accused  of  verboseness, 
as  I  was  in  Pittsburgh  the  other  day.  When  I  was  about  to 
address  the  merchants  of  Pittsburgh — a  man  came  up  to  me  and 
said,  "Are  you  a  political  speaker  ?" 

I  said,  "No.     Why?" 

He  said,  "Because  it  takes  you  so  long  to  say  nothing.'' 
(Laughter.)  ; 

Lest  I  be  accused  of  that,  I  am  going  to  say  something,  gen- 
tlemen, and  I  am  going  to  say  it  frankly  and  specifically,  and  trust 
to  your  vision  to  accept  it  in  the  spirit  in  which  I  utter  it.  I  am 
going  to  ask  a  question. 

The  question  I  am  going  to  ask,  which  I  have  been  wanting 
to  ask  for  a  great  many  years,  but  have  always  found  myself  in 
some  other  land  when  it  has  seemed  most  important  to  me, 
is:  Why  is  it  that  the  average  American  manufacturer  who 
takes  the  greatest  pains  in  constructing  his  goods  just  right,  in 
the  preparation  of  his  advertising  literature  and  his  sales  letters, 
will  then  turn  around  and  appoint  as  his  traveler  abroad  some 
Hicksville  pallbearer  with  a  three  days'  growth  and  a  long  flowing 
tie  because  he  happens  to  understand  the  language,  but  who  does 
not  know  the  line  from  a  large  juicy  slice  of  watermelon;  or 
else  he  will  go  to  the  opposite  extreme  and  select  some  genius 
from  the  molding  room,  with  a  jaw  like  an  adding  machine  and 
a  freight-yard  vocabulary,  who  knows  the  line  from  basement 
to  shingles  and  can  lick  any  man  who  says  he  doesn't.  (Laughter.) 

Now,  I  can  answer  that  question.  And  the  answer,  I  sup- 
pose, has  been  given  to  you  here  during  these  sessions  and  for 
the  past  ten  or  twenty  years.  The  answer  is:  Because  the 
American  manufacturer,  the  average  manufacturer  who  sets  out 
upon  the  choppy  sea  of  export  sales  development,  has  never  been 
abroad  himself;  or,  if  he  has  perchance  been  abroad  his  oversea 
experience  has  consisted  of  a  trip  to  Paris  and  up  Montmartre 
in  tow  of  a  Cook's  guide,  with  his  letter  of  credit  strapped  to 
his  heart.  (Laughter.)  And  when  he  comes  back  you  cannot 
possibly  touch  him  on  this  question  of  export  trade.  He  will  not 
believe  anything  you  say,  because  he  has  been  there.  That,  pos- 

443 


Seventh  Session — Wednesday  Afternoon 


sibly,  is  the  answer  to  the  question,  because  he  himself  has  not 
been  abroad  at  all,  or  thinks  he  knows  it  when  he  doesn't. 

I  maintain  that  any  American  manufacturer  who  is  sufficiently 
seriously  interested  in  the  question  of  export  trade  development, 
should  consider  it  just  as  important  a  thing  for  him  to  visit  the 
countries  he  intends  to  supply  as  it  is  for  him  to  visit  his  factory 
and  know  his  machinery,  and  visit  the  domestic  trade  and  know 
his  domestic  trade. 

If  it  is  not  possible  for  him  personally  to  go — and  here 
comes  in  this  whole  question — he  should  at  least  appoint  as  his 
export  manager  some  man  who  himself  has  had  wide  experience 
in  selling  the  export  markets,  or  who,  at  least,  does  not  enclose 
a  two-cent  postage  stamp  when  he  wants  a  reply  from  the  other 
side.  (Laughter.)  Some  American  manufacturers  think  that  if 
their  man  knows  the  line  and  the  language  that  is  all  that 
is  necessary;  but  there  is  something  vastly  more  necessary  than 
that,  and  that  is  a  degree  of  culture  and  politeness  and  education 
in  dealing  with  the  manicured  merchants  of  foreign  countries; 
and  every  man  in  this  country  who  himself*  has  been  abroad  I 
am  sure  will  bear  me  out  in  that  statement.  There  is  no  need  of 
my  telling  you  the  value  of  the  personal  equation  in  a  sale.  You 
know  it.  But  I  tell  you  that  the  social  factor  in  foreign  sales, 
gentlemen,  plays  a  far  wider,  bigger  part  than  most  of  us  here 
in  this  hustling,  bustling,  get-down-to-business  country  of  the 
United  States  ever  dreamed  of.  It  is  a  big  part,  it  is  a  big  factor 
in  the  sale.  That  is  what  I  know,  and  that  is  what  I  am  sure  every 
man  of  export  selling  experience  knows. 

In  1903,  when  I  made  my  first  extensive  trip  abroad,  I  used 
to  wonder  why  it  was  that  in  some  countries  we  Americans  were 
about  as  welcome  as  a  hair  in  the  butter  or,  as  some  humorist  said, 
as  a  wet  dog  at  a  picnic.  I  never  could  understand  it  until  I  began 
to  analyze  the  situation,  and  I  found  that  the  average  impression 
had  been  formed  of  America  and  Americans  not  by  reading 
history  but  by  coming  in  contact  with  a  type  of  American  sales- 
man that  was  formerly  sent  into  other  countries.  But  those 
manufacturers  who  made  those  initial  mistakes  in  the  develop- 
ment of  their  foreign  business  corrected  them  as  soon  as  the 
executives  themselves  went  into  those  countries  and  saw  just 
what  kind  of  people  it  was  necessary  to  deal  with;  and  then 
they  soon  found  what  type  of  salesman  was  necessary  to  send 
there  to  successfully  carry  out  the  sale.  So,  today,  you  find 
among  the  older  exporters  a  high  representative  type  of  American 

444 


The  American  Salesman  Abroad 


gentleman,  and  he  is  all  over  the  world  today.     But  the  same 
mistake,  gentlemen,  is  being  made  every  day  in  the  year. 

I  contend  that  cooperation  depends  upon  meeting  the  other 
fellow  and  getting  his  point  of  view.  Do  you  know,  gentlemen, 
that  your  only  medium  of  understanding  or  misunderstanding 
with  your  export  clients  is  your  salesman?  Think  of  that  tre- 
mendous factor  and  the  importance  of  it. 

Suppose  your  representative  reports  that  Smith  &  Company 
are  not  in  the  market.  How  are  you  ever  going  to  know,  back 
here  five  or  ten  thousand  miles  from  that  selling  talk  exactly 
what  happened  ?  Might  it  not  have  been  that  Smith  &  Company 
were  not  in  the  market  because  they  may  have  heard  your  repre- 
sentative the  night  before  tell  a  crowd  of  his  friends  what  he 
thought  about  the  whole  country  ?  We  Americans,  whose  country 
is  made  up  of  all  nationalities,  can  scarcely  appreciate  what  that 
sort  of  thing  means  to  a  people  who,  for  generations  and  genera- 
tions, have  been  brought  up  in  the  same  country. 

I  want  to  say  here,  and  I  believe  this  statement  will  be 
borne  out  by  men  of  experience  on  the  other  side  in  the  selling 
game,  that  if  the  average  merchant  abroad  takes  a  dislike  to  your 
salesman  he  will  see  your  goods  in  the  seventeenth  sub-basement 
of  Limbo  before  he  will  place  an  order  for  them.  That  is  just 
how  independent  he  is;  and  I  admire  him  for  it;  because  I  feel 
that  when  business  is  conducted  along  fine,  gentlemanly,  courteous 
lines  it  is  one  of  the  rarest  pleasures  in  this  world,  and  ceases  to 
be  work  at  all;  and  that  is  why  I  am  for  it  myself. 

This  problem  of  getting  the  right  kind  of  man  to  travel 
abroad  has  always  been  a  knotty  one  for  solution.  Many  a 
salesman  has  fluttered  off  on  his  first  trip  abroad  for  dear  firm 
full  of  enthusiasm  and  farewell  dinners,  and  then  limped  back, 
maybe  a  year  later,  with  an  eight-deck  expense  account,  and 
nothing  to  show  for  it  but  a  little  souvenir  fan  from  Maxim's, 
or  a  couple  of  fizz  corks  for  1'Abbaye  (laughter),  and  others 
have  stayed  for  six  months  abroad  and  then  come  back  to  find 
out  what  it  was  that  they  went  abroad  to  attend  to.  (Laughter.) 
Why  is  it  that  this  fizzle-finish  perches  so  often  upon  the  spotless 
record  of  the  domestic  traveler  when  he  is  suddenly  transferred 
to  the  export  field  Take  a  perfectly  good  home  salesman  who 
has  worked  himself  up  from  what  I  call  a  county  hurdler  to  the 
point  where  he  can  canvass  big  towns  without  going  wrong. 
Put  this  same  man  in  the  export  trade  and  what  is  apt  to  happen, 
and  what  has  happened  right  away?  He  takes  the  bit  in  his 

445 


Seventh  Session — Wednesday  Afternoon 


teeth,  kicks  in  the  dashboard,  jumps  over  the  traces  and 
clatters  down  the  highway  with  the  sparks  flying  from  his  heels 
like  a  village  smith's  anvil  on  Saturday  morning.  Why  didn't 
he  show  speed  in  Dubuque  or  in  New  York  or  Chicago?  I 
can  tell  you  why,  by  telling  you  a  little  story  of  an  actual  experi- 
ence that  came  under  my  observation  one  time  in  Russia. 

A  certain  American  manufacturing  firm  got  growing  pains 
and  decided  to  invade  the  export  market,  about  which  they  had 
been  reading  in  an  export  journal. 

They  selected  two  of  their  gold  medal  salesmen  who  had  been 
laying  in  tall  harvests  of  orders  every  season  with  no  crop 
failures  chalked  up  against  them,  and  there  was  no  doubt  about 
the  ability  of  these  men  to  get  business  anywhere. 

The  third  man  selected  was  a  young  Frenchman  who  had 
traveled  about  the  world,  but  he  came  over  here  to  learn  Ameri- 
can ways  of  doing  business.  Dear  Firm  selected  this  young 
Frenchman  with  some  misgivings,  because  he  smoked  cigarettes 
and  drank  claret  with  his  dinner,  and  always  took  out  time  dur- 
ing a  selling  talk  to  glance  at  anything  in  the  way  of  feminine 
beauty  that  happened  to  flutter  by  at  the  time. 

The  firm  decided  to  send  this  squad  to  Russia  first.  The 
young  Frenchman  said  he  could  lead  them  safely  through  the 
land  of  the  Czar  on  the  French  language ;  but  the  firm  promptly 
tabooed  the  suggestion.  They  said  he  could  not  lead  a  cow.  He 
associated  with  cigarettes  and  claret.  Besides,  they  said,  the 
Russian  language  was  absolutely  essential,  too.  So,  on  a  high 
stool  in  the  bookkeeping  department  sat  a  long,  silent  individual 
who  had  once  been  professor  of  languages  at  some  college,  and 
who  spoke  the  Russian  language.  He  had  what  might  be  defined 
as  a  wrought  iron  face.  Nobody  ever  saw  him  smile,  and  he 
never  thawed,  and  so  he  was  highly  respected.  (Laughter.) 

The  firm,  therefore,  decided  to  put  him  in  charge  as  inter- 
preter for  the  boys,  and  something  was  whispered  to  him  on  the 
side  about  keeping  an  eye  on  this  frisky  Frenchman. 

In  time  the  squad  got  started,  and  for  about  two  weeks 
afterward  the  gold  medal  boys  and  the  interpreter  were  struck 
numb  and  dumb  by  the  sight  of  so  many  beautiful  women,  such 
jewels  and  champagne  and  the  sight  of  high  life  generally,  until 
their  eyes  grew  glassy  and  chimes  rang  in  their  ears. 

The  Frenchman  did  not  seem  to  get  excited  at  all.  He  just 
continued  to  smoke  his  cigarettes.  But  by  the  time  the  "flying 
wedge,"  I  believe  it  was  called,  and  I  believe  it  was  too — by  the 

446 


The  American  Salesman  Abroad 


time  it  reached  Petrograd,  the  ossified  section  had  got  to  the 
point  where  they  could  mumble  a  few  incoherent  sentences  and 
appear  in  their  wooden  dress  suits  without  forgetting  to  put 
on  their  collars  or  something  in  the  excitement.  But,  mark  you, 
after  they  were  in  Petrograd  a  week  you  might  have  seen  them 
flying  around  with  their  isvoschik  to  the  Marinski,  and  the  Aquari- 
um and  the  Ice  Palace  and  the  gay  cabarets  that  open  at  midnight 
and  close  when  the  daylight  begins  to  sting  the  blinking  eyes  of 
the  patrons.  (Laughter.) 

Every  night  they  might  be  seen  in  first  tier  boxes  at  the 
opera  and  the  theater  and  buying  wine  for  a  galaxy  of  youth 
and  beauty  who  insisted  that  they  be  allowed  to  drink  to  the 
health  of  these  men.  They  drank  up  about  $400  worth  of  the 
firm's  money  to  the  health  of  their  representatives.  (Laughter.) 

Old  "Ironface,"  if  you  will  permit  me  to  call  him  so,  started 
to  raise  side  whiskers  and  smoke  cigarettes  in  an  amber  holder 
a  yard  long,  tucked  his  handkerchief  in  his  cuff  and  took  a  small 
vodka  before  his  caviar.  (Laughter.) 

One  night  he  introduced  the  two  gold  medal  boys  to  a 
couple  of  Russian  princesses  hailing  from  Marseilles ;  and  it  was 
all  off  to  Vesuvius  with  the  trio  after  that!  (Laughter.) 

Of  course,  the  true  situation  came  out  when  the  men  ran 
out  of  money  and  cabled  home  for  refreshments. 

They  had  been  furnished  with  sufficient  lubricating  oil  to  last 
them  a  year,  and  so,  naturally,  their  S.  O.  S.  caused  their  firm 
to  gasp  like  a  gaffed  sturgeon,  believe  me.  (Laughter.) 

The  result  was  that  they  were  called  home,  including  the 
frisky  Frenchman,  who  was  naturally  supposed  to  be  the  in- 
stigator extraordinary  of  the  bacchanalia. 

Nobody  had  seen  them  do  any  work;  because  they  didn't 
do  any  work  except  to  polish  up  their  expense  account  every 
afternoon  about  four  o'clock — when  they  got  up  for  break- 
fast. (Laughter.) 

The  young  Frenchman  did  all  the  chores.  In  the  daytime  he 
went  out  to  see  the  trade.  And  at  night  he  would  put  the 
millionaires  to  bed,  turn  out  the  electric  lights  for  them  and  put 
their  shoes  out  in  front  of  the  door  to  be  stove  polished.  Never- 
theless, when  they  were  all  called  home,  he  was  supposed  to  be 
the  instigator. 

The  two  gold  medal  boys  were  sacked  on  the  spot,  and  went 
home  and  quarreled  with  their  wives  because  their  wives  looked 
so  ugly  and  out-of-date. 

447 


Seventh  Session — Wednesday  Afternoon 


Mr.  Iron  face  was  put  back  on  the  high  bookkeeper's  stool 
to  work  out  $1,500  that  they  found  he  was  "off  side."  (Laugh- 
ter.) He  was  supposed  to  be  working  it  out  at  $50  a  month. 
(Laughter.)  When  I  last  saw  him  he  had  done  $600,  and  would 
have  welcomed  death  in  any  form.  (Laughter.)  The  thrilling 
drama  related  in  his  expense  book  showed  that  he  had  made  side 
trips  to  every  corner  of  Russia  and  Siberia,  figuring  up  some- 
thing like  $1,800.  (Laughter.) 

I  have  told  this  little  story,  gentlemen,  because  I  want  to 
rriake  a  point  of  it.  I  want  to  say  this:  Why  was  it  that 
this  young  Frenchman — and  he  might  have  been  an  American; 
it  does  not  make  any  difference;  I  will  bring  that  point  out  in  a 
minute — why  was  it  that  he,  who  had  only  done  fair  work  in 
the  domestic  field  prior  to  departing  for  Russia,  showed  up  so 
much  better — although  I  must  admit  that  he  got  into  overalls 
one  time  at  the  factory,  which  made  a  great  hit  with  the  firm,  and 
spent  twenty- four  hours  in  the  factory,  thus  thoroughly  master- 
ing the  practical  end  of  the  line — why  was  it  that  he  could  do 
the  distance  safe  and  sane  in  the  foreign  field  when  star  per- 
formers broke  badly  in  the  first  lap? 

I  will  tell  you  why.  It  was  because  he  had  traveled  the 
world  first.  He  had  lived  in  gay  Paris.  It  was  because  he  was 
used  to  things.  He  was  used  to  things  that  we  simply  do  not  have 
here.  He  was  used  to  things  that  we  simply  do  not  have  in  Ameri- 
ca. And  I  want  to  tell  you  that  no  man  knows  his  own  capacity 
for — if  I  may  use  the  slang  phrase — for  "cutting  loose"  until  he 
has  gone  up  against  the  foreign  trade.  It  takes  a  man  on  his 
first  trip  practically  all  of  the  time  not  to  study  the  trade  but  to 
study  himself.  And  the  man  who  does  not  know  his  emotional 
mechanism  and  cannot  find  his  emergency  brake  in  time  of 
need  is  headed  hell  ward  in  the  foreign  trade.  (Laughter.)  That 
is  a  fact,  gentlemen.  And  the  wise  Firm  is  the  Firm  that  hangs 
onto  the  men  who  have  done  the  distance  in  fair  shape  and 
brought  back  some  hew  business,  because  these  men  have  become 
acclimatized.  They  represent  an  investment  that  will  bring  com- 
pound interest.  It  is  a  very  good  test  of  character  when  a 
man  can  meet  the  pleasure-hugging  environment  of  foreign 
cities,  where  every  feminine  eye  is  loo-candle-power  easily, 
where  some  of  your  biggest  customers  are  thoroughly  cosmo- 
politan themselves,  to  put  it  very  conservatively,  and  where  some 
of  the  largest  deals  are  framed  up  across  the  glasses,  perhaps 
in  some  first-class  restaurant. 

448 


The  American  Salesman  Abroad 


It  is  quite  simple  to  be  secretary  of  a  Sunday  School  board 
and  read  your  four-page  newspaper  and  put  the  brush  under  the 
window  and  go  to  bed  at  night  and  get  up  in  the  morning,  and 
then  next  night  go  to  hear  the  phonograph  play  in  the  cigar 
store  as  a  rollicking  divertisement.  It  is  another  thing  when 
you  go  out  into  a  country  altogether  different  from  the  Life 
Simple. 

In  this  connection  I  suppose  I  ought  to  say  something  about 
the  professional  patriot  abroad. 

A  gentleman  remarked  this  afternoon  in  his  address  before 
this  meeting  that  we  should  be  very  proud  of  America  when  we 
are  traveling.  I  have  yet  to  find  any  American  salesman  who 
has  not  been  very  proud  of  America.  In  fact,  we  are  aggressively 
proud  of  America,  and  most  of  us  who  kick  the  loudest  about 
this  government  and  do  not  do  a  thing  to  remedy  matters  become 
suddenly  wonderful  patriots  when  we  get  on  the  other  side,  where 
we  cannot  do  any  good  by  it.  That  is  a  fact.  (Laughter  and 
applause.) 

As  I  said  a  while  ago,  we  who  are  made  up  of  all  nationalities 
are  prone  not  to  realize  how  persons  abroad  may  be  affected 
by  any  comments  of  ours — comments  which  are  only  too  apt  to 
be  made  when  a  man  goes  away  and  is  particularly  partial  to  his 
own  country.  He  frequently  does  not  realize  that  nine  times  out 
of  ten  he  is  talking  to  people  who  are  descendants  of  people  from 
that  country  which  he  is  criticizing,  and  quite  as  justly  proud 
of  their  country  as  he  is  of  his  country. 

When  you  are  in  another  country  and  you  feel  it  necessary  to 
take  it  upon  yourself  to  become  press  agent  for  Uncle  Sam  and 
tell  the  natives  what  they  don't  know,  and  what  they  do  not  do 
that  they  ought  to  do,  and  to  criticize  everything,  it  is  foolish — 
it  is  not  common  sense,  and  it  is  not  business. 

I  think  it  might  not  be  a  bad  plan  to  always  remember  in 
this  matter  of  oversea  salesmanship  these  things : 

When  you  are  engaging  salesmen  for  traveling  the  export 
markets  see  to  it  that  they  have,  in  addition  to  a  knowledge  of 
the  line  and  the  language,  a  fair  education,  good  address,  more 
than  ordinary  tact  and  diplomacy,  a  sense  of  proportion,  some 
degree  of  social  experience  and  considerable  restraint  in  the  use 
of  the  cuspidor  (laughter) — because  there  is  no  such  thing  as 
a  cuspidor  outside  of  America. 

Here  is  another  thing  that  is  quite  important  to  you  who  are 
executives:  Do  not  write  quibbling,  nagging  letters  to  your  men 

449 


Seventh  Session — Wednesday  Afternoon 


when  they  are  ten  thousand  miles  away.  A  United  States  post- 
mark is  a  good  thing  to  look  upon  when  a  man  is  far  away  from 
home  and  friends;  but  when  it  covers  a  letter  of  an  irritating 
character  it  depresses  a  man  abnormally.  The  same  letter  re- 
ceived here  would  not  do  it.  A  conversation  would  not  do  it. 
But  get  a  man  away  off  in  some  other  land  where  he  knows  no 
one  and  he  is  hurt  and  affected-  by  that  sort  of  thing.  But  I 
am  not  telling  you  not  to  do  it  for  his  sake.  Do  not  do  it  for 
your  own  sake,  because  not  only  is  the  man  benefited  but  you 
yourselves  are  benefited  when  you  enthuse  your  men  in  the 
export  field.  A  depressed  man  is  not  a  good  business  man. 
Keep  your  salesmen  enthusiastic. 

If  your  export  manager  cannot  write  his  men  about  the  busi- 
ness because  he  knows  nothing  about  it  himself  then  tell  him  not 
to  write  them  at  all.  You  will  get  more  business  if  he  does  not 
write  them  a  line. 

If,  for  instance,  when  you  are  wrestling  with  some  big 
problem,  particularly  some  big  contract,  you  receive,  if  you  are 
a  salesman,  a  letter  from  the  export  manager  who,  himself,  has 
never  been  in  any  foreign  city  except  Hoboken  (laughter) — if 
you  receive  a  letter  from  him  and  he  criticizes  you  for  putting 
insufficient  postage  on  your  letter  because,  as  he  writes,  at  tre- 
mendous length,  using  the  words  "the  writer"  all  the  way 
through,  which  he  loves  to  put  in — if  he  writes  you  at  tremendous 
length  that  when  you  put  insufficient  postage  on  your  letter  it 
means  that  he  has  to  pay  something  here  on  that  letter  when  it 
comes,  and  you  know  that  a  mail  went  out  at  a  certain  time,  and 
that  every  place  that  sold  postage  stamps  was  closed,  and  that  you 
had  in  your  pocket  half  the  amount  and  decided  to  put  it  on  the 
letter  and  send  it  off  on  a  special  post  or  special  train  and  get  it 
to  your  firm  and  save,  perhaps,  a  couple  of  weeks  in  catching 
the  steamer — I  tell  you,  when  you  do  that,  and  you  are  working 
on  a  big  problem,  and  get  that  kind  of  a  letter  from  a  man 
who  cannot  possibly  write  about  the  business  because  he  is  not 
familiar  with  it,  it  not  only  hurts  the  salesman  but  it  hurts  your 
business.  That  is  the  whole  trouble.  That  is  why  I  make  a  plea 
for  the  men  who  are  in  the  foreign  field.  I  speak  for  a  great 
many  men,  because  I  have  seen  letters  that  have  come  from  their 
organizations  about  little  things — the  little  things,  the  quibbling, 
nagging  little  things  that  mean  nothing  to  the  business,  that 
4mean  nothing  to  the  development  of  your  trade;  they  are  simply 
excuses  for  writing,  because  this  chincapin  knows  not  himself 

450 


The  American  Salesman  Abroad 


what  to  write  about  that  is  helpful,  but  feels  that  he  must  write, 
so  he  antagonizes  rather  than  harmonizes. 

There  is  another  thing,  gentlemen,  that  I  want  to  suggest. 
Do  not  sentence  your  men  to  spend  a  certain  number  of  months 
or  years  in  a  given  country  unless  you  expect  them  to  cover  only 
that  country.  If  you  have  the  right  kind  of  men  they  will  know 
there  better  than  you  do  here  when  a  given  territory  is  properly 
covered.  The  trade  abroad  is  full  of  men  sitting  around  the 
lobby  smoking  big  black  cigars,  waiting  for  a  steamer  to  sail, 
and  when  you  say  to  them:  "What  is  the  matter,  boys,  aren't 
you  attending  to  anything?"  they  say,  "I  finished  a  month  ago, 
but  the  Firm  says  I  have  to  stay  here  until  May  i."  That  is 
what  I  mean. 

Here  is  another  one,  gentlemen:  Do  not  expect  your  sales- 
men, no  matter  how  clever,  to  sell  your  goods  if  the  goods  are 
not  suited  to  the  export  market.  I  suppose  that  has  been  said 
no  less  than  a  hundred  times  during  these  sessions. 

If  an  English  salesman  came  over  here  and  tried  to  sell  the 
standard  English  shirt,  which  Mr.  Coleman  over  there  knows 
so  well,  as  do  many  of  you,  and  which  is  made  so  that  you  have 
to  pull  it  over  your  head,  he  could  not  get  a  haberdasher  here  to 
buy  it.  He  would  want  a  coat  shirt.  And  if  the  salesman  couldn't 
talk  coat  shirts,  he  couldn't  talk  business. 

There  are  certain  things  that  a  scientific  and  skillfully  trained 
salesman  can  do,  but  salesmanship  cannot  do  that  sort  of  thing 
— that  is,  introduce  goods  that  are  absolutely  unfitted  for  the 
market  which  you  are  trying  to  develop. 

One  thing  more:  Never  write  sharp  or  intemperate  letters 
to  your  clients  abroad.  In  the  first  place  they  do  not  understand 
such  letters,  and  in  the  second  place  they  do  not  want  to. 
(Laughter.)  Besides,  that  sort  of  thing  keeps  your  salesmen 
doing  more  apologizing  than  a  club-footed  dancer  on  a  crowded 
floor.  (Laughter.) 

If  you  send  a  man  abroad  and  he  does  not  do  business,  or 
you  circularize  the  export  field  and  you  do  not  get  returns,  do 
not  conclude  forthwith  that  you  cannot  do  business  there.  Your 
man  may  not  have  been  the  right  man,  and  your  letter  may  not 
have  been  the  right  kind  of  letter. 

Use  the  same  common  sense,  as  I  said  at  the  outset,  in  de- 
veloping your  export  business  that  you  do  in  developing  your 
domestic  business. 


Seventh  Session — Wednesday  Afternoon 


Now  let  me  say  that  to  any  American  who  has  for  years  been 
in  the  selling  game  in  many  countries  of  the  world,  who  has 
seen  what  can  be  done  even  in  ordinary  times,  without  the  ad- 
vantage that  a  great  war  has  logically  thrown  in  our  way,  the 
great  problem,  the  supreme  problem  in  his  mind,  is  why  more 
American  manufacturers  do  not  go  after  export  business. 

Germany  needed  no  war-created  opportunity  to  develop  a 
big  business.  But  we  have,  in  addition  to  the  trade  that  has 
always  been  there  for  us  if  we  wanted  to  go  after  it,  the  ad- 
vantage of  this  war;  and  that  is  the  supreme  question  in  every 
salesman's  mind:  why  more  men  are  not  interested  in  it. 

I  claim  that  there  is  no  finer,  cleaner,  more  profitable  or 
satisfactory  business,  gentlemen,  than  the  export  business,  than 
that  which  the  merchants  of  other  countries  send  you. 

I  want  to  say  that  whatever  I  have  today  of  breadth  of 
vision  in  international  commercial  matters,  of  patience  and  toler- 
ance in  dealing  with  business  men  today  on  this  side,  I  owe  in 
very  large  measure  to  the  kindly  influence  and  the  tolerance  of 
my  splendid  friends  across  the  sea;  and  I  am  glad  that  I  have 
had  this  opportunity  to  express,  even  so  poorly,  a  sentiment  that 
lies  so  deep  and  permanent  in  my  heart. 

I  am  filled  with  the  spirit  of  the  export  trade.  I  love  to 
do  business  with  the  big  importing  houses  of  the  world.  I  have 
yet  to  find  an  unpleasant  experience  with  any  of  them,  and  I 
know  that  when  the  day  comes  when  we  can  better  understand 
one  another  and  realize  that,  after  all,  the  race  is  one,  with 
fundamental  interests  identical,  we  will  usher  in  the  millennium. 

I  thank  you.     (Great  applause.) 


THE  CHAIRMAN  :  The  report  of  the  Committee  on  Recom- 
mendations is  next  in  order. 

MR.  COWLES:  Before  you  have  the  report  from  the  Com- 
mittee on  Resolutions,  Mr.  Chairman — 

THE  CHAIRMAN  :  But  that  is  the  next  business  in  order,  Mr. 
Cowles. 

Gentlemen,  at  the  session  yesterday  the  Committee  on  Rec- 
ommendations was  appointed,  and  that  Committee,  I  understand, 
is  now  ready  to  report.  Assuming  that  it  is  your  pleasure  I  will 
now  introduce  the  chairman  of  that  Committee,  Captain  White, 
who  will  make  his  report. 

452 


Report  of  Committee  on  Recommendations 

Report  of  Committee  on  Recommendations 

CAPT.  WHITE:  Gentlemen,  in  presenting  the  recommenda- 
tions the  Committee  had  also  in  mind  a  vote  of  appreciation  to 
the  President  and  the  organization  of  this  Association  for  their 
painstaking  care  and  trouble  in  bringing  about  this  Conference. 
It  is  one  of  the  most  important  subjects  that  the  Association 
has  ever  taken  up,  and  its  first  meeting  promises  a  splendid  future 
along  the  same  lines. 

Mr.  President,  I  have  the  pleasure  of  presenting  the  fol- 
lowing recommendations. 

THE  CHAIRMAN:  The  Secretary  will  read  the  recommenda- 
tions of  the  Committee. 

MR.  BENNEY:  The  first  recommendation,  gentlemen,  is  as 
follows : 

First:  Whereas,  the  success  of  this  Conference  has  demon- 
strated its  value  to  the  members  of  the  National  Association  of 
Manufacturers,  particularly  through  the  participation  therein  of 
representatives  from  foreign  trade  bodies  and  governments,  it 
is  recommended  that  such  meetings  be  continued,  to  take  place 
annually  and  to  be  held  in  New  York  City  during  the  months 
of  November,  December,  as  the  President  of  this  Association 
may  direct;  and  that  invitation  to  participation  therein  be  ex- 
tended to  commercial  representatives  of  foreign  governments  in 
the  United  States  and  to  foreign  trade  bodies. 

THE  CHAIRMAN  :  Gentlemen,  you  have  heard  the  first  recom- 
mendation of  the  Committee.  I  think  it  is  the  proper  subject  of 
discussion  and  vote.  What  is  your  pleasure  with  reference  to 
it?  A  motion  to  adopt  it,  if  such  should  be  your  pleasure,  is  now 
in  order. 

MR.  IVERSON  :  I  move  that  the  recommendation  be  adopted, 
Mr.  Chairman. 

DR.  KRYSHTOFOVICH  :  I  second  the  motion,  Mr.  Chairman. 

THE  CHAIRMAN  :  The  motion  is  that  this  recommendation  be 
adopted  as  the  sense  of  this  Conference.  Are  you  ready  for  the 
question,  gentlemen?  Those  in  favor  of  the  motion  will  say 
"Aye."  (After  a  pause.)  Those  opposed  will  say  "No." 

The  motion  is  carried  unanimously,  and  the  recommendation 
of  the  Committee  is  adopted. 

MR.  BENNEY:  The  second  recommendation  is  as  follows: 

Second:  As  it  is  essential  for  the  development  and  exten- 
sion of  reciprocal  trade  relations  between  the  United  States  and 

453 


Seventh  Session — Wednesday  Afternoon 


other  countries  that  an  adequate  system  of  transportation  facili- 
ties be  provided,  the  Committee  recommends  the  increase  of  the 
American  mercantile  marine  for  the  purposes  of  foreign  trade. 

THE  CHAIRMAN  :  You  have  heard  this  recommendation,  gen- 
tlemen, which  is  an  important  one  that  has  been  before  us  for 
a  long  time,  a  sufficient  time  in  order  to  warrant  its  full  con- 
sideration, and  I  have  no  doubt  you  are  ready  to  give  expression 
by  your  vote  upon  that  subject. 

MR.  FARQUHAR:  We  all  recognize  the  importance  of  the  in- 
crease. We  do  not  say  how,  of  course. 

THE  CHAIRMAN:  A  motion  to  adopt  this  recommendation 
would  be  in  order.  Do  I  hear  such  a  motion  ? 

MR.  PROSKAUER  :  I  move  its  adoption. 

MR.  IVERSON  :  I  second  the  motion. 

CAPT.  WHITE  :  May  I  say  a  word,  Mr.  Chairman  ? 

THE  CHAIRMAN:  Captain  White. 

CAPT.  WHITE:  I  wish  to  invite  the  attention  of  the  Associa- 
tion to  the  fact  that  this  recommendation  has  been  made  not  only 
by  the  members  of  this  Association  but  by  the  gentlemen  present 
from  foreign  countries,  showing  their  interest  in  the  development 
of  the  American  merchant  marine.  (Applause.) 

THE  CHAIRMAN  :  The  ship  goes  both  ways. 

MR.  IVERSON:  May  I  ask  Captain  White  one  question,  Mr. 
Chairman  ? 

THE  CHAIRMAN:  Certainly. 

MR.  IVERSON:  Was  it  the  Committee's  object  just  to  present 
the  recommendation  and  let  it  die  there,  or  shall  we  press  it  a 
little  further? 

CAPT.  WHITE:  The  recommendation  was  presented  by  the 
Committee  for  the  Association  to  vote  on  as  it  saw  fit,  with 
any  such  tag  as  they  might  desire  to  put  on  it.  We  only  fathered 
the  recommendation.  You  may  put  a  tag  on  it,  if  you  wish. 

MR.  IVERSON  :  If  the  Committee  will  consider  a  tag  on  it,  I 
would  offer  an  amendment  to  be  added  to  it,  that  the  recom- 
mendation be  forwarded  to  the  Congress  of  the  United  States 
now  in  session,  especially  to  the  Committee  on  Merchant  Marine. 

CAPT.  WHITE:  There  is  no  objection,  so  far  as  the  Committee 
is  concerned  in  regard  to  forwarding  these  things,  but  it  is  not 
the  province  of  the  Committee,  which  is  composed  of  men  repre- 
senting foreign  trade  bodies,  to  make  such  recommendations. 
The  action  of  the  Association  is  something  that  we  have  no  con- 

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Report  of  Committee  on  Recommendations 

trol  over;  and  we  cannot  add  to  our  recommendation,  because  it 
would  not  be  within  our  province. 

MR.  IVERSON  :  I  fully  appreciate  that,  but  I  thought  possibly 
this  Conference  would  desire  to  take  such  action. 

MR.  FARQUHAR  :  That  should  be  a  recommendation  of  yours, 
following  action  upon  the  report  of  the  Committee. 

MR.  IVERSON  :  I  only  wanted  to  get  action  on  it.  That  was 
all.  If  we  do  not  take  some  action  on  it  we  will  never  get  to  it. 

CAPT.  WHITE  :  A  resolution  might  be  offered. 

MR.  IVERSON  :  No  resolution,  I  believe,  is  in  order. 

THE  CHAIRMAN  :  With  the  consent  of  the  mover  we  will  put 
the  motion  on  the  recommendation  of  the  Committee  first,  and 
then  he  can  introduce  a  motion  afterwards  on  the  basis  of  an 
amendment. 

Gentlemen,  you  have  heard  the  motion  that  this  Conference 
adopt  the  recommendation  of  the  Committee  which  has  been  read 
to  you.  Are  you  ready  for  the  question  ? 

Those  in  favor  of  the  motion  will  say  "Aye." 

Those  opposed  "No." 

The  motion  is  unanimously  carried,  and  the  recommendation 
of  the  Committee  is  adopted. 

Now,  if  you  wish  to  make  an  additional  motion,  Mr.  Iverson. 

MR.  IVERSON  :  I  should  like  to  make  an  additional  motion  that 
the  recommendation  be  forwarded  by  the  Conference  to  the  Con- 
gress of  the  United  States,  to  the  proper  committee,  now  in  ses- 
sion, to  consider  such  recommendation. 

THE  CHAIRMAN  :  I  hear  no  second  to  the  motion.  Is  it 
seconded  ? 

MR.  COWLES  :  I  second  the  motion. 

THE  CHAIRMAN  :  You  have  heard  the  motion,  gentlemen. 
Are  you  ready  for  the  question? 

All  in  favor  of  this  motion  will  say  "Aye." 

Those  opposed  will  say  "No." 

I  think  the  motion  is  lost.     Is  a  division  desired  ? 

MR.  IVERSON  :  I  will  leave  that  to  the  discretion  of  the  Chair. 

THE  CHAIRMAN  :  I  think,  perhaps,  under  the  circumstances, 
the  preferable  way  would  be  to  refer  the  recommendation  to  the 
National  Association  of  Manufacturers  and  let  them  take  such 
action  on  the  recommendation  as  they  think  best. 

MR.  IVERSON  :  I  am  perfectly  willing  to  substitute  that,  Mr. 
Chairman. 

455 


Seventh  Session — Wednesday  Afternoon 


THE  CHAIRMAN  :  Unless  there  is  some  objection  to  that,  that 
will  be  the  course  we  will  take,  then. 

Are  there  any  further  recommendations,  Mr.  Secretary? 

MR.  BENNEY:  The  third  recommendation  of  the  Committee 
is  as  follows : 

Third:  As  it  is  essential  for  the  successful  development  of 
foreign  trade  relations  that  banking  facilities  for  foreign  coun- 
tries be  established,  the  Committee  recommends  that  immediate 
effort  be  made  to  further  develop  such  facilities.  The  Committee 
also  recommends  especial  attention  to  the  papers  that  have  been 
presented  at  this  Conference  regarding  banks,  banking  facilities, 
foreign  investments,  and,  especially,  those  regarding  the  extension 
of  foreign  credits. 

THE  CHAIRMAN  :  Gentlemen,  what  is  your  pleasure  with  this 
recommendation  of  the  Committee?  Is  it  your  pleasure  to  adopt 
it  ?  If  so,  a  motion  to  do  so  would  be  in  order. 

MR.  FARQUHAR  :  I  move  the  adoption  of  the  recommendation 
of  the  Committee. 

MR.  MONTT:  I  second  the  motion. 

THE  CHAIRMAN:  Gentlemen,  you  have  heard  the  motion. 

All  in  favor  of  this  motion  will  say  "Aye." 

Those  opposed  will  say  "No." 

The  motion  is  unanimously  carried,  and  the  recommendation 
of  the  Committee  is  adopted. 

Does  this  complete  the  recommendations  of  the  Committee, 
Mr.  Secretary? 

MR.  BENNEY  :  There  is  one  more. 

Fourth:  The  Committee  recommends  that  the  Association 
offer  its  services  to  adjust  differences  which  may  arise  between 
its  members  and  their  customers  abroad,  especially  in  the  inter- 
pretation of  documents,  forms  and  technical  terms,  and  that  stand- 
ard terms,  nomenclature  and  forms  be  compiled  with  reference 
to  each  foreign  country  according  to  its  laws  and  customs,  and 
that  information  in  regard  to  such  standards  be  provided  for  our 
members,  all  American  consular  offices  and  foreign  trade  bodies. 

MR.  BENNEY  (continuing)  :  May  I  say  a  word  there? 

THE  CHAIRMAN  :  Mr.  Benney  desires  to  say  a  word  in  con- 
nection with  this  recommendation. 

MR.  BENNEY:  The  first  part  of  that  recommendation,  gen- 
tlemen, has  been  to  some  degree  done  for  many  years  by  the  As- 
sociation. Our  Foreign  Trade  Department  has  offered  its  ser- 
vices, not  in  a  very  formal  manner,  but  incidentally  here  and  there, 

456 


Report  of  Committee  on  Recommendations 

to  business  houses  abroad  who  have  had  disputes  with  our  mem- 
bers or  even  non-members,  and  in  a  number  of  cases  these  dis- 
putes have  been  taken  up  by  us  and  adjusted  amicably. 

CAPT.  WHITE:  The  Committee  simply  made  that  recom- 
mendation that  such  knowledge  might  be  universal  rather  than 
particular. 

THE  CHAIRMAN  :  Gentlemen,  what  is  your  pleasure  as  to  this 
recommendation  by  your  Committee?  A  motion  to  adopt  it  is 
in  order.  The  Chair  does  not  hear  such  a  motion. 

MR.  IVERSON  :  I  move  the  adoption  of  the  recommendation  of 
the  Committee. 

MR.  FARQUHAR  :  I  second  the  motion. 

THE  CHAIRMAN  :  Those  in  favor  of  this  motion  will  please 
say  "Aye."  Those  opposed  "No." 

(The  motion  was  unanimously  carried.) 

The  recommendation  of  the  Committee  is  adopted. 

MR.  BENNEY:  I  believe  the  Chairman  of  the  Committee 
wishes  to  have  the  names  of  the  gentlemen  who  put  their  names 
to  these  recommendations  spread  upon  the  record.  Do  you  wish 
me  to  read  them  ? 

CAPTAIN  WHITE:  If  you  please. 

THE  CHAIRMAN:  At  the  request  of  the  Chairman  of  the 
Committee  the  names  of  the  members  of  the  Committee  who 
have  taken  part  in  the  discussions  that  have  resulted  in  these  rec- 
ommendations will  be  read. 

CAPTAIN  WHITE:  Excuse  me,  Mr.  Chairman.  There  is 
still  one  recommendation  that  was  omitted. 

MR.  BENNEY:  This  will  be  the  fifth: 

Fifth:  It  is  recommended  that  reports  of  the  proceedings 
of  this  Conference  be  sent: 

To  Governments,  Chambers  of  Commerce  and  Boards  of 
Trade  of  the  countries  which  have  participated  in  this  Con- 
ference; 

To  all  American  Consular  offices;  and 

To  such  other  bodies  which  may  be  interested  in  partici- 
pating in  future  Conferences. 

THE  CHAIRMAN:  Gentlemen,  you  have  heard  this  recom- 
mendation. It  just  occurs  to  the  Chair  that  that  carries  with  it 
a  necessary  expenditure  of  a  considerable  sum  of  money,  and  I 
do  not  see  how  this  body  can  make  provision  for  the  expense  that 
would  be  involved  in  doing  that.  I  assume,  however,  that 

457 


Seventh  Session — Wednesday  Afternoon 


we  can  accept  the  recommendation  as  being  one  to  the  National 
Association,  if  it  sees  a  way  to  carry  it  out. 

CAPTAIN  WHITE:  Exactly. 

THE  CHAIRMAN:  We  can  always  make  a  resolution  to 
spend  some  other  fellow's  money.  (Laughter.) 

All  in  favor  of  this  recommendation  will  say  "Aye." 

MR.  BENNEY:  Colonel  Pope  has  requested  me  to  say  that 
before  this  Conference  actually  began  it  had  been  practically 
agreed  by  officers  of  the  Association  that  this  should  be  done. 

MR.  PHILLIPS  :  Is  the  sense  of  that  resolution  that  the  trans- 
mission of  the  report  of  this  Conference  be  simply  to  those  coun- 
tries which  have  been  represented  here  or  have  in  some  way 
participated?  I  do  not  know  whether  all  have.  But  it  may  be 
that  there  are  some  which  have  not  actually  participated  with 
which  we  might  get  into  closer  relations  and  be  benefited  by  their 
receiving  the  reports. 

THE  CHAIRMAN  :  The  sense  of  the  recommendation,  as  the 
Chair  gathers  it,  is  that  it  refers  to  those  who  took  part  in  the 
Conference.  I  assume,  of  course,  that  the  Association  will  make 
such  further  and  more  extensive  use  of  the  reports  as  it  may 
desire  to  promote  the  business  of  the  Conference. 

MR.  FARQUHAR  :  If  they  are  to  pay  the  bills  it  should  be  left 
to  them,  I  think,  necessarily. 

CAPTAIN  WHITE:  I  might  say  the  Committee  on  Recom- 
mendations was  not  informed  as  to  what  the  Association  might 
do.  It  was  simply  put  in  that  form  so  that  it  would  be  called  to 
the  attention  of  the  Association  in  order  that  it  might  do  whatever 
it  might  regard  as  its  duty  in  the  matter. 

THE  CHAIRMAN  :  The  Chairman  recognizes  what  is  well 
known,  that  the  Association  is  one  of  business  generosity  as  well 
as  efficiency,  and  that  all  the  steps  which  can  possibly  be  taken  to 
diffuse  the  information  which  has  been  brought  forth  at  this 
very  important  Conference  will  be  taken. 

Gentlemen,   are  you   ready   for  the  question? 

Those  in  favor  of  the  motion  will  say  "Aye." 

Those  opposed  will  say  "No." 

The  motion  is  unanimously  carried. 

MR.  BENNEY  :  The  following  members  of  the  Committee  ap- 
pointed have  participated  in  the  work  of  the  Committee: 

Captain  Wm.  P.  White,  Lowell  Paper  Tube  Corporation, 
Lowell,  Mass.  (Chairman). 

458 


Report  of  Committee  on  Recommendations 


Hon.  P.  E.  Qninn,  Deputy  Trade  Commissioner  of  New 
South  Wales,  Australia. 

Leopold  Perutz,  of  Schenker  &  Company,  Vienna,  Austria. 

Eduardo  Carrasco,  Commercial  Delegate  of  Chile. 

Francisco  Escobar,  representing  the  Chamber  of  Commerce 
of  Bogota,  Colombia. 

Baron  Jacques  de  Neuflize,  representing  the  Chamber  of 
Commerce  of  Paris,  France. 

W.  La  Gro,  of  the  Netherlands  Trading  Society,  Amster- 
dam, Holland. 

Count  Dr.  Riccardo  Gatteschi,  representing  the  Chamber 
of  Commerce  of  Naples,  Italy. 

Alberto  Falcon,  representing  the  Chambers  of  Commerce  of 
Lima  and  Arequipa,  Peru. 

A.  B.  Farquhar,  representing  the  Chamber  of  Commerce  of 
the  United  States  of  America,  Washington,  D.  C. 

E.  G.  Swift,  of  Parke,  Davis  &  Company,  Detroit,  Mich. 

George  D.  Selden,  of  the  Erie  City  Iron  Works,  Erie,  Pa. 

Mark  W.  Selby,  of  the  Selby  Shoe  Company,  Portsmouth,  O. 

A.  C.  Hahn,  of  the  Phoenix  Chair  Company,  Sheboygan,  Wis. 

THE  CHAIRMAN  :  Is  there  anything  further  from  your  Com- 
mittee, Captain  White? 

CAPTAIN  WHITE:  Nothing  further. 

MR.  COWLES  :  It  might  be  well,  Mr.  Chairman,  to  add  to  the 
various  recommendations  a  resolution  to  this  effect: 

"Resolved,  that  the  President  and  Postmaster  General  be 
respectively  requested  to  increase  our  foreign  parcel  post  to  the 
widest  possible  limits." 

If  you  will  allow  me  I  would  like  to  say  about  five  words 
in  reference  to  that. 

THE  CHAIRMAN  :  That,  I  should  say,  would  have  to  be  re- 
ferred to 'the  Committee  on  Recommendations  for  consideration 
before  being  presented  to  this  body,  Mr.  Cowles. 

CAPTAIN  WHITE  :  I  might  suggest  to  the  gentleman  that  with 
the  increased  American  merchant  marine  that  has  been  recom- 
mended by  the  Committee  all  such  facilities,  trade  facilities,  are, 
of  course,  understood  to  be  included;  so  that  our  parcel  post 
would  be  extended  to  foreign  countries.  You  must  remember 
this  is  a  recommendation  by  a  group  of  gentlemen  who  come 
from  all  countries. 

459 


Seventh  Session — Wednesday  Afternoon 


MR.  COWLES  :  Yes. 

CAPTAIN  WHITE  :  Therefore  we  are  a  little  hesitant  in  mak- 
ing specific  recommendations  which  relate  to  the  action  of  the 
Government. 

THE  CHAIRMAN  :  I  think  that  will  cover  Mr.  Cowles'  desire 
in  the  matter. 

MR.  COWLES  :  Could  you  allow  me  to  say  a  word  with  refer- 
ence to  the  foreign  parcel  post? 

THE  CHAIRMAN:  It  is  not  quite  germane  at  this  moment, 
Mr.  Cowles. 

We  have,  indeed,  more  than  passed  the  time  for  the  com- 
pletion of  the  program  of  this  Conference. 

I  just  desire  to  say  a  word  of  thanks  before  surrendering  the 
Chair  to  the  President  of  the  National  Association  of  Manu- 
facturers, who  are  the  hosts  of  this  Conference. 

I  am  sure  that  I  express  the  feeling  of  all  those  who  have 
been  privileged  to  attend  these  conferences  as  to  the  exceeding 
value  that  they  have  had.  It  has  been  especially  agreeable  to 
meet  and  to  hear  from  the  representatives  of  so  many  countries 
with  which  we  are  related  to  a  greater  or  less  extent,  and  to  which 
we  hope  to  be  related  commercially  to  a  very  much  greater  extent. 

I  am  sure  that  in  the  exchange  of  views  as  to  the  promotion 
of  our  mutual  business — because  business  can  only  be  promoted 
when  it  is  mutual — I  am  sure  that  in  the  exchange  of  the  differ- 
ent views  all  of  us,  those  from  abroad  and  those  from  at  home, 
will  feel  that  the  results  of  this  Conference  abundantly  justify 
its  calling,  and  our  extending  our  thanks,  as  has  already  been 
done,  to  Mr.  Benney  and  the  National  Association  of  Manu- 
facturers. (Applause.) 

Now,  gentlemen,  I  will  ask  that  the  President  of  that  Asso- 
ciation take  the  Chair  and  bring  the  Conference  to  a  conclusion. 
(Applause.) 

PRESIDENT  POPE:  Gentlemen  of  the  Conference:  The  Na- 
tional Association  of  Manufacturers  thanks  the  delegates  from 
abroad  and  from  at  home,  members  of  the  Association  and  all 
others  who  have  taken  part,  for  the  success  of  this  three-days 
Conference;  for  I  call  it  a  success,  and  I  believe  you  will 
all  agree  with  me. 

The  meetings  have  been  fully  attended  during  the  entire 
three  days  and  one  evening  of  conference,  and  the  interest  has 
not  lagged. 

460 


Adjournment  of  Conference 


The  remarkable  set  of  papers  and  of  talks  that  we  have  had 
will  certainly  make  a  volume  of  interest  to  the  entire  commercial 
world — and  I  mean  the  commercial  world — to  the  banking  fra- 
ternity, and,  I  believe,  to  our  libraries  and  to  our  institutions 
of  learning;  for  our  educators  occupying  chairs  relating  to  com- 
mercial life  can  learn  much  from  the  men  who  have  given  their 
lives  to  that  work. 

Therefore,  I  congratulate  you  all.  There  has  been  so  much 
commercially  educational  said  here  that  has  been  instructive,  I 
believe,  to  all.  Plain  truths  have  been  said  so  courteously  and 
so  nicely  that  the  most  sensitive  mind  in  this  republic  of  ours 
could  certainly  take  no  offense,  but  only  be  glad  that  those  things 
had  been  said. 

Another  thing  has  impressed  me  very  much,  and  that  is  that 
the  generation  in  commercial  life  that  is  passing  on  need  have 
no  apprehension  whatever  as  to  the  maintenance  of  its  exist- 
ence in  our  country,  for  the  young  men  who  have  appeared  be- 
fore us  in  these  three  days  have  amply  demonstrated  their  ability 
and  their  present  grasp  on  affairs  of  our  country;  and  to  them 
we  owe  many  thanks. 

To  attempt  to  summarize  what  has  been  done  would  be  a 
long  task  for  anyone,  and  you  have  heard  so  much  and  sat  here 
so  long  that  you  do  not  want  that.  Therefore,  gentlemen,  again 
thanking  you  all,  I  declare  this  Conference  adjourned. 
(Applause.) 

(Whereupon,  at  4:50  o'clock  P.M.,  the  Conference  was  ad- 
journed sine  die.) 


461 


Countries,  Organizations  and  Companies 


COUNTRIES,  ORGANIZATIONS  AND  COMPANIES 

represented  at  the 

INTERNATIONAL  TRADE  CONFERENCE 

December  6-7-8,  1915 
(with  names  of  representatives) 

AUSTRALIA: 

Australian  Cadets Perth 

Lieut.  J.  J.  Simons,  Arthur  Coyne,  E.  F.  Shacklock 
Frazer  &  Best,  Ltd Sydney 

Percy  Roderick  McLean 
Government  of  New  South  Wales Sydney 

P.  E.  Quinn 
AUSTRIA: 

Schenker  &  Company Vienna 

Leopold  Perutz 
BELGIUM: 

G.  Kraticks Brussels 

BRAZIL: 

Brazilian  Embassy Washington,    D.    C. 

His  Excellency  Domicio  da  Gama,  Ambassador 
Brazilian  Consulate-General New  York 

H.  C.  de  Martins  Pinheiro,  Consul-General 
Associagao  Commercial  da  Bahia Bahia 

Antonio  Carlos  de  Several 
Camara  de  Comercio Bahia 

Daniel  Lindo 
Guerin  &  Company Rio  de  Janeiro 

M.  J.  Guerin 

M.  P.  Thomas Rio  de  Janeiro 

CANADA: 

Canadian  Bank  of  Commerce .  .  .  .  Toronto 

J.  P.  Bell 
Royal  Bank  of  Canada Montreal 

Norman  G.  Hart 

J.  B.  MacLean Toronto 

CHILE: 

Government  of  Chile New  York 

Eduardo  Carrasco,  Commercial  delegate 
CHINA: 

American  Consulate-General Shanghai 

Thomas  Sammons,  Consul-General 

Fred  Barton Shanghai 

COLOMBIA: 

Banco  Central Bogota 

Eduardo  Correa 
Banco  Comercial  de  Barranquilla Barranquilla 

Joseph  F.  Cosby,  E.  A.  de  Lima 
Banco  de  Bogota Bogota 

Agustin  Nieto  Caballero 
Banco  de  la  Mutualidad Bucaramanga 

N.  Marcinez  H. 
Banco  de  Sucre Medellin 

Eduardo  Correa 
Camara  de  Comercio Bogota 

Agustin  Nieto  Caballero,  Francisco  Escobar 
Camara  de  Comercio Cartagena 

Raphael  dal  Castillo,  Diego  Martinez,  Esteban  de 

Pombo 
COSTA  RICA: 

Banco  Mercantil  de  Costa  Rica San  Jos6 

Jaime  Rojas 
Camara  de  Comercio  de  Costa  Rica San  Jos6 

Manuel  Gonzalez  Z. 

463 


International  Trade  Conference 


CUBA: 

Camara  de  Comercio  Industria  y  Navigacion  de  la  Isla 

de  Cuba Havana 

Octavio  Zayas 
DENMARK: 

Aarbye  &  Lange Copenhagen 

E.  Lange 

Russisk  Handels  Company Copenhagen 

K.  A.  Friis  Hansen 
DOMINICAN  REPUBLIC: 

Camara  de  Comercio,  Industria  y  Agricultura Santo  Domingo 

Francisco  J.  Peynado 
ECUADOR : 

Max  Muller  &  Co Guayaquil 

Max  Muller 
FRANCE: 

American  Chamber  of  Commerce Paris 

W.  G.  P.  Hollingsworth,  Charles  Shoninger 

Banque  Franco-Japonaise Paris 

Henri  Fournel 

Banque  Nationale  de  Credit Paris 

M.  Fibein 

Chamber  of  Commerce Paris 

Baron  Jacques  de  Neuflize 

Comptoir  National  d'Escompte Paris 

Maurice  Silvester 

French  Department  of  Foreign  Affairs Paris 

M.  Heilman 

Tito  Mazzoni Paris 

GREAT  BRITAIN: 

Richard  Mayer-Bacum London 

HOLLAND  : 

Amsterdam  Epl.  Maatschappij Amsterdam 

E.  M.  Berendnes 
Amsterdam  Ryting  Maatschappij Amsterdam 

A.  C.  A.  Perk 

Nederlandsche  Handel- Maatschappij Amsterdam 

W.  LaGro 
HONDURAS: 

Banco  de  Comercio Tegucigalpa 

Charles  L.  Parmelee 
INDIA: 

International  Trading  Company Calcutta 

Peter  Borrowman 
Marshall  &  Company Bombay 

N.  M.  Marshall 

B.  R.  Ambedkar Baroda 

N.  M.  Bhatena Bombay 

R.  R.  Power Baroda 

J.  A.  Setna Bombay 

Bhai  Suchet  Singh Ferozepore 

ITALY: 

Italian  Consulate-General New  York 

Guido  Rossati,  Commercial  Attach^ 
American  Chamber  of  Commerce Milan 

Charles  F.  Hauss,  Carl  L.  Hauss 
Chamber  of  Commerce Naples 

Count  Riccardo  Gatteschi 
Chamber  of  Commerce Rome 

Dr.  Albert  C.  Bonaschi 
Louis  Donegani Leghorn 

D.  E.  Donegani 
JAPAN: 

Japanese  Consulate-General New  York 

M.  Yagi 
Franco- Japanese  Bank Tokyo 

Henri  Fournel 
Kobe  Commercial  College Kobe 

B.  Uchtike 

Shimidzu,  Levi  &  Soriana -. Yokohama 

Raphael  Z.  Levi 

464 


Countries,  Organizations  and  Companies 


NICARAGUA: 

Nicaraguan  Legation Washington.   D.    C. 

His  Excellency  Emiliano  Chamorro,  Minister 

Banco  Nacional  de  Nicaragua Managua 

Alfred  Meyer 
NORWAY: 

American  Norwegian  Chamber  of  Commerce .  .  . .  Chicago,'  111. 

E.  H.  Kobe 

Chamber  of  Commerce Christiania 

Trygve  Wettre 
Malsted  Company Christiania 

A.  R.  Schirve 
PANAMA  : 

Panama  Association  of  Commerce Panama 

Joseph  W.  Heymann 
PERSIA: 

Imperial  Persian  Consulate-General New  York 

H.  H.  Topakyan,  Consul-General 

Herant  M.  Kiretchjian,  Secretary 
PERU: 

Peruvian  Legation Washington,    D.    C. 

His  Excellency  Federico  Alfonso  Pezet,  Minister 
Banco  del  Peru  y  Londres Lima 

R.  L.  Beausire 
Camara  de  Comercio Arequipa 

Alberto  Falcon 
Camara  de  Comercio Lima 

Eduardo  Higginson,  Alberto  Falcon 

Rodrigo  Zarate Lima 

PHILIPPINE  ISLANDS: 

Manila  Merchants  Association Manila 

Martin  Egan,  Charles  M.  Swift 
A.  N.  Jureidini  &  Bros Cebu 

Elie  K.  Jureidini 
PORTO  Rico: 

Chamber  of  Commerce  of  Porto  Rico San  Juan 

Arthur  M.  Lamport 
PORTUGAL: 

Associacao  Commercial .  .  Oporto 

Wilfred  H.  Schoff 
RUSSIA: 

Russian  Embassy Washington,    D.    C. 

C.  J.  Medzikhovsky,  Commercial  Attach6 
Russian  Ministry  of  Agriculture Petrograd 

Dr.  Theo.  Kryshtofovich,  Miss  E.  Melick-Beglaroff 
Russian  Agricultural  Society Moscow 

Michael  J.  Imchanitzky 
Russian- American  Chamber  of  Commerce Moscow 

Alexander  W.  Behr 
Russian  Association  of  Commerce  and  Industry Moscow 

A.  S.  Postnikoff 
Russo- American  Commercial  Company New  York 

H.  R.  Cremer 
E.  Heyde  &  E.  von  Schulz Moscow 

Emil  von  Schulz 
Henry  A.  Lehrs Moscow 

John  A.  Lehrs 

Geo.  J.  Sosnawski Warsaw 

SERBIA: 

Dushan  Opachich Belgrade 

SPAIN: 

Spanish  Consulate-General New  York 

F.  Javier  Salas.  Francisco  Blanco 

Centro  de  Informaci6n  Comercial  del  Ministerio  de 

Estado Madrid 

F.  Javier  Salas 
Hijos  de  Antonio  Feliu Barcelona 

James  Bragado 
L.  F.  Solorzano Barcelona 

465 


International  Trade  Conference 


SWEDEN: 

General  Export  Association  of  Sweden Stockholm 

John  Aspegren 
Swedish  Chamber  of  Commerce  of  U.  S.  A New  York 

John  Lokrantz 
SWITZERLAND: 

Swiss  Consulate New  York 

Louis  H.  Junod,  Consul,  Frederick  Oederlein 
Chamber  of  Commerce Basel 

Alfred  Vondermuhll 
Chamber  of  Commerce Zurich 

Frederick  Oederlin 
TURKEY: 

American  Chamber  of  Commerce  for  the  Levant Constantinople 

J.  Wylie  Brown 
Robert  C.  Rindelaub Constantinople 

Robert  C.  Rindelaub 

UNITED  STATES  OF  AMERICA: 

Organization  or  Company.  Address.  Representative. 

Aeolian  Company New  York L.  A.  Goldsmith  (Miss) 

Ajax  Grieb  Rubber  Company.  .  .  . New  York John  A.  Moore 

Allegheny  Steel  Company Pittsburgh,  Pa C.  C.  McLean 

Alexander  Brothers Philadelphia,  Pa James    H.    Bayi,    W.    H. 

Trump 
Allen  &  Company,  S.  L Philadelphia,  Pa E.  W.   Burt,  Edward  L. 

Richie 

Allentown  Portland  Cement  Co.  .Allentown,  Pa C.  R.  Rinehart 

American  Adding  Machine  Co. .  .  .Richmond,  Ind James  A.  Carr 

American  Anti-Intervention  Ass'n.San  Antonio,  Tex. . .  .  Wm.  Teitelbaum 
American  Ass'n  of  Refrigeration.  . Chicago,  111 H.    Dannenbaum,    J.    F. 

Nickerson 

American  Belting  Companies Baltimore,  Md Geo.  D.  Iverson,  Jr. 

American  Cotton  Oil  Co New  York Joseph  G.  Gash 

American  Ever  Ready  Works .  .  .  .L.  I.  City,  N.  Y F.  S.  Phillips 

"American  Exporter" New  York B.  Olney  Hough 

American  Exporters  &  Importers 

Association New  York C.  E.  Barry 

American  Express  Company New  York Donald  Frothingham 

American  Hardware  Corporation .  New  York Geo.  F.  Taylor 

"American  Industries" New  York F.  W.  Keough,  H.  L.  Allen 

American  Locomotive  Sales  Corp'n.  New  York Chas.  M.  Muchnic 

American  Mfrs.  Export  Ass'n New  York E.    V.    Douglas,    M.    A. 

Oudin 

American  Pad  &  Paper  Co New  York F.  S.  Bradford 

"American  Paint  &  Oil  Dealer"..  .St.  Louis,  Mo Allen  W.  Clark 

American  Rolling  Mill  Co Middletown,  O L.  J.  Lewery 

American  Saw  &  Mfg.  Co Springfield,  Mass. .  .  .  Edward  A.  Judge 

American  Society  of  Heating  and 

Ventilating  Engineers New  York J.  J.  Blackmore,  James  A. 

Donnelly 
American  Stove  Co St.  Louis,  Mo Irvin  W.  Peffly,  Carroll  S. 

Rogers 

American  Type  Founders  Co Jersey  City,  N.  J. .  .  .Constant  Southworth 

American  Vulcanized  Fibre  Co. .  .Wilmington,  Del.  .  .  .H.  M.  Grant 

Ansonia  Electrical  Co Ansonia,  Conn Robert  J.  Smyth 

Ansonia  O.  &  C.  Co Ansonia,  Conn W.  F.  Fassett 

Art  Metal  Construction  Co Jamestown,  N.  Y H.  C.  Chadwick 

Ass'n   of  American   Portland   Ce- 
ment Manufacturers Philadelphia,  Pa Percy  H.  Wilson,   Ernest 

R.    Ackerman,    Arthur 

W.  Kelly 
Atkin  &  Company,  E.  C Indianapolis,  Ind. .  .  .  Nelson       A.        Gladding, 

Henry  Walton 
Atlas  Portland  Cement  Co New  York Frank  B.  McKenna,  J.  F. 

Meyer,  John  A.  Upshur 

Aurora  Laboratories  Company. . .  .Aurora,  111 C.  D.  Downer 

Babson's  Statistical  Organization .  Wellesley  Hills,  Mass.D.  G.  Montt 

Baker  Printing  Company Newark,  N.  J S.  R.  Baker 

Ballantine  &  Sons,  P Newark,  N.  J Charles  Ashmun 

466 


Countries,  Organizations  and  Companies 


Organization  or  Company.  Address.  Representative. 

Bancroft  &  Sons  Co.,  Joseph Wilmington,  Del.  .  .  .Chas.       A.       Bamberger 

Harry  W.  Roberts 

Bateman  Manufacturing  Co Grenloch,  N.  J Fred  H.  Bateman 

Beaver  Board  Company Buffalo,  N.  Y Wm.    F.    Buckley,  R.  G. 

Burns 

Beckwith- Chandler  Company ....  New  York R.  R.  Kelly 

Benjamin  &  Johnes Newark,  N.  J Chas.  B.  Johnes 

Bessemer  Gas  Engine  Company. .  .  New  York J.  W.  Macartney 

Billings  &  Spencer  Company Hartford,  Conn Lewis  D.  Parker 

Binney  &  Smith New  York E.    S.    Finch,    Jr.,    H.    F. 

Heckendorn,  A.  F.  Kit- 

chel,  M.  B.  Rehse 

Bishop  Gutta  Percha  Co New  York Henry  D.  Reed 

Bjelland  &  Company,  Chr New  York Chr.  Williamson 

Blanchard  Company,  Isaac  H  .  . .  .  New  York J.  Cliff  Blanchard 

Board  of  Foreign  Missions  of  the 

Methodist  Episcopal  Church  . .  .  New  York I.  W.  Glasel,  C.  C.  Miles, 

Lawrence  H.  Rich 
Board  of  Trade  (Maine  State) .  .  .  .Bangor,  Me Geo.    L.    Crosman,    Louis 

B.  Goodall 

Board  of  Trade Easton,  Pa Thomas  A.  H.  Hay 

Board  of  Trade Little  Rock,  Ark .  .  .  .Theo.  H.  Price 

Board  of  Trade Louisville,  Ky Percy  H.  Johnston 

Board  of  Trade Passaic,  N.  J F.  F.  Uehling 

Board  of  Trade Springfield,  Mass.  ...E.G.  Spear 

Bond  &  Goodwin New  York R.  E.  Cropley,  Harry  W. 

Roper 

Bonner  &  Barnewall,  Inc New  York C.  M.  Vail 

"Boot  and  Shoe  Recorder" Boston,  Mass S.  S.  Brill 

Bostwick,  L.  C New  York 

Bowser  &  Company,  S.  F Fort  Wayne,  Ind R.  G.  Shulze 

Bradstreet  Company New  York Edward  S.  Strobhar 

Bridgeport  Hardware  Mfg.  Corp'n. Bridgeport,  Conn. ..  .Harry   B.    Curtis,   W.    F. 

Hobbs 

Bristol-Myers  Company Brooklyn,  N.  Y W.  L.  Bomer,  G.  Bowski 

Brown  Brothers  &  Company New  York John  R.    Currier,   W.   N. 

Hardy,  Jason  A.   Neil- 
son 

Brown  Son  &  Company,  W.  H  .  .  .  New  York M.  W.  Ryan 

Brown  Export  Company New  York S.  Britton 

Bureau  of  Foreign  and   Domestic 

Commerce Washington,  D.  C. .  .  Dr.  E.  E.  Pratt 

Bureau  of  Foreign  and  Domestic 

Commerce  (branch) New  York E.    C.    Porter,    Albert    J. 

Barnaud,  Louis  Naetz- 

ker,  P.  J.  Stevenson 

B.  V.  D.  Company New  York Will  L.  Smith 

Calculagraph  Company New  York Henry  Abbott 

Capewell  Horse  Nail  Company .  .  .  Hartford,  Conn L.  L.  Gaylord 

Carter's  Ink  Company Boston,  Mass Walter  F.  Wyman,  O.  T. 

Erickson 

Celfor  Tool  Company Buchanan,  Mich .  .  .  .  M.  L.  Hanlin 

Chamber  of  Commerce Cleveland,  O F.  L.  Roberts 

Chamber  of  Commerce Milwaukee,  Wis W.  P.  Bishop 

Chamber  of  Commerce New  Haven,  Conn. .  .H.  L.  Sargent 

Chamber  of  Commerce Portland,  Me Geo.  L.  Crosman 

Chamber  of  Commerce Richmond,  Va J.  Scott  Parrish 

Chamber  of  Commerce Rochester,  N.  Y D.  E.  Delgado 

Chamber  of  Commerce Syracuse,  N.  Y J.  W.  Brooks 

Chamber  of  Commerce Wilmington,  Del .  .  .  .Thos.  H.  Stirling 

Chamber  of  Commerce  of  the  U.  S.. Washington,  D.  C . .  .  A.  B.  Farquhar 
Chattanooga  Mfrs.  Ass'n Chattanooga,  Tenn.  .C.    H.    Huston,    John    L. 

Newkirk,  Jr. 

Cheney  Bigelow  Wire  Works Springfield,  Mass. .  .  .E.  C.  Spear 

Chicago, Milwaukee  &  St.  Paul  Ry.New  York W.  W.  Hall 

Columbia  Mills,  Inc New  York I.     G.     Cooley,     W.     H. 

McDonald 

Comas  Cigarette  Machine  Co ...  .Salem,  Va F.  V.  N.  Painter 

Compania       Comercial       Latina- 

Americana New  York Theo.  M.  May 

467 


International  Trade  Conference 


Organization  or  Company.  Address.  Representative. 

Commercial  Museum Philadelphia,  Pa Dudley  Bartlett,   Wilfred 

H.     Schoff,     Geo.     C. 
Gibson 

Compton  Shear  Company,  W.  H.  .  Newark,  N.  J Arthur  L.  Myers 

Computing-Tabulating-Recording 

Company New  York R.  L.  Houston,  Gershom 

Smith 

"Continental" New  York Hector  T.  Casasus,  M.  J. 

Sierra 

Corona  Typewriter  Company,  Inc.Groton,  N.  Y C.  F.  Brown 

Cotton  Goods  Export  Ass'n New  York Howard  Ayres 

Crescent  Garter  Company New  York Louis    Reibstein,    Robert 

Reibstein 

Crex  Carpet  Company New  York C.  J.  Bunbury 

Crosman  &  Sons  Company,  G.  A.  .Portland,  Me Geo.  L.  Crosman 

Crown  Cork  &  Seal  Company.  . .  .Baltimore,  Md W.  F.  Pilcher 

Csesznak,  Steven  de,  Inc New  York Steven  de  Csesznak,  Geo. 

C.  Vedder 

Davis-Bournonville  Company.  .  .  .Jersey  City,  N.  J. .  .  .Chas.    F.    Gessert,    F.    C. 

Whitney,    C.    B.    Wor- 
tham 

Dayton  Mfg.  Company Dayton,  O John  Kirby,  Jr. 

Department  of  Commerce Washington,  D.  C. .  .Dr.  E.  E.  Pratt,  Jas.  F. 

Ferguson 

Department  of  State Washington,  D.  C . .  .Hon.  W.  B.  Fleming 

Dentists'  Supply  Company York,  Pa G.  H.  Whittley 

Detroit  Stove  Works Detroit,  Mich H.  D.  Schall 

Detroit  Sulphite  Pulp  &  Paper  Co.Detroit,  Mich F.  H.  MacPherson 

Detroit  Twist  Drill  Company Detroit,  Mich Halsted     Little,     M.     B. 

Snow 

Devlin  Mfg.  Company,  Thomas.  .Philadelphia,  Pa M.    B.    Haspel,    Louis   J. 

McGrath 

Diamond  Crystal  Salt  Company.  .St.  Clair,  Mich Henry  Whiting,  Rudolph 

Fiala 

Dixon  Crucible  Company,  Jos.  . .  .Jersey  City,  N.  J. .  .  .Geo.  E.  Long 
"Dry  Goods  Economist" New  York S.  H.  Ditchett,  B.  Hast- 
ings, A.  C.  Pearson 

Dun  &  Company,  R.  G New  York C.  A.  Green 

"Dun's  Review" New  York C.  M.  Wilson 

Dwight  &  Lloyd  Sintering  Co ....  New  York Jos.  C.  Benson 

Earl  &  Wilson New  York Robt.  N.  King 

Eastman  Kodak  Company Rochester,  N.  Y D.  E.  Delgado 

"El  Comercio" New  York N.    R.    Barrett,    R.     G. 

Meggy 

Electric  Wheel  Company Quincy,  111 Ira    R.     Calkins,    A.    E. 

Zoller 

Empire  Rubber  &  Tire  Company.  .Trenton,  N.  J Thos.   O  Callaghan,   Jr. 

Erie  City  Iron  Works Erie,  Pa Geo.  D.  Selden 

Esterbrook  Steel  Pen  Co New  York Wm.   I.   Halsey,   Ellwood 

Kenney 

Excelsior  Shoe  Company Portsmouth,  O J.  W.  Bannon,  Jr. 

"Export  American  Industries". . .  .New  York H.  R.  Hazard,  S.  Lassner, 

F.  J.  Lowe,  H.  M.  Wood 

Faber,  Eberhard Brooklyn,  N.  Y Edward  E.  Huber 

Fay  &  Egan  Company,  J.  A Cincinnati,  O Major  Andrew  W.  Feuss 

Fearon,  Brown  Company New  York F.  E.  Green 

Federal  Motor  Truck  Company.  .  .Detroit,  Mich R.  M.  Lockwood 

Federal  Trade  Commission Washington,  D.  C  . .  .D.  A.  Morrow,  David  L. 

Wing 

Federal  Utilities,  Inc New  York Geo.  C.  Galliver 

Ferracute  Machine  Company Bridgeton,  N.  J Enos  Paullin 

First  National  Bank  of  Boston.  .  .Boston,  Mass F.  Abbot  Goodhue. 

First  National  Bank  of  Milwaukee.  Milwaukee,  Wis E.  J.  Hughes 

First  Carpet  Company Firthcliffe,  N.  Y Fred  Booth 

Fisher,  A.  M Washington,  D.  C . . . 

Fisher  &  Norris Trenton,  N.  J Lieut,   and   Mrs.   Andrew 

Fisk  &  Sons,  Harvey New  York Harold  E.  Fisk,  Jr. 

Firestone  Tire  &  Rubber  Co Akron,  O R.    J.    Firestone,    C.    O. 

Brandes,  E.  C.  Knox, 
R.  M.  McConnell,  A.  G. 
Partridge,  J.  G.  Robert- 
son, Dan  C.  S  wander  ,y 

468 


Countries,  Organizations  and  Companies 


Organization  or  Company.  Address.  Representative. 

Flagg  &  Company,  Stanley  G.  .  .  .Philadelphia,  Pa Stanley  G.  Flagg,  Jr.,  A 

L.  Ceyelin 

Ford  &  Company,  R.  M New  York C.  S.  Snider 

Ford  Motor  Company Detroit,  Mich E.G.  Sherman 

Foreign  Trade  Service.  Inc New  York E.  T.  Simondetti 

Franklin  Electric  Mfg.  Co Hartford,  Conn Jno.    W.    Morrell,    J.    A. 

Butler,  Jonathan  Camp 

Fraser,  Turk  &  Myers New  York C.  K.  Fraser 

French  &  Ward New  York G.  Liggett  (Miss) 

Fuller  Engineering  Company New  York C.  R.  Rinehart 

Garfield  &  Company New  York J.  B.  Garfield 

Gaston,  Williams  &  Wigmore,  Inc  .  New  York Joseph  J.   Keegan,   H.  J. 

Rosencrantz 

General  Electric  Company New  York M.  A.  Oudin 

General  Motors  Truck  Co New  York Geo.  F.  W.  Poggenburg 

Gerhard  &  Hey,  Inc New  York H.  E.  Reeve 

Gilbert  Clock  Co.,  William  L Winsted.  Conn H.  L.  Slauson 

Gill  Bros.  Company Steubenville,  O John  Beiswanger 

Goodrich  Company,  B.  F Akron,  O E.  C.  Shaw 

Goodrich  &  Company,  Wm Milwaukee,  Wis Wm.  O.  Goodrich 

Goodyear  Tire  &  Rubber  Co Akron,  O T.     L.     Coleman,    J.     C. 

MacFadyear 

Grace  &  Company,  W.  R New  York John  P.  Caswell 

Gregg  Company,  The Hackensack,  N.  J .  .  .L.  D.  Gregg 

Greene,  Tweed  &  Company New  York H.  S.  Demarest 

Guaranty  Trust  Company New  York J.  Santilhano,  George  von 

Seebeck,  George  Weston 

Guiterman,Rosenfeld&  Company  .New  York P.  L.  Guiterman 

Gurley,  W.  &  L.  E Troy.  N.  Y H.  M.  Dibert 

Hagy  Waste  Works,  J.  Milton Philadelphia,  Pa Edw.  Laterman 

Haines,  Robert  F Brooklyn,  N.  Y 

Harbison- Walker  Refractories  Co.Pittsburgh,  Pa Hamilton  Stewart 

"Hardware  Age" New  York E.  H.  Darville 

Haviland  Shade  Roller  Co New  York E.  F.  Haviland 

Hay  &  Sossidi New  York N.  J.  Sossidi 

Hayden,  Miller  &  Company Cleveland,  O Lewis  B.  Williams 

Haynes  Auto  Company New  York E.  E.  Bloom 

Heide,  Henry New  York Henry       Heide,       Henry 

Heide,     Jr.,     Geo.      G. 
Eberhardt 

Heisey  &  Company,  A.  H Newark,  O A.  H.  Heisey 

Hill  Publishing  Company New  York Mason  Britton 

Hodenpyl  Hardy  &  Co.,  Inc New  York Gilbert  B.  Bogart 

Hoggson  &  Pettis  Mfg.  Co New  Haven,  Conn. .  .Harry  B.  Kennedy 

Huddleston  Marsh  Mahogany  Co.  New  York R.  S.  Huddleston 

Hudson  Motor  Car  Company.  .  .  .Detroit,  Mich John  A.  Olt 

Hydraulic  Pressed  Steel  Co Cleveland.  O O.  P.  Stehn 

Illinois  Manufacturers  Ass'n Chicago,  111 R.  P.  Lament,  Chester  N. 

Stevens 

Ingersoll  &  Bro.,  Robt.  H New  York H.    T.    O'Connor,    R.   A. 

Piatt 

Ingersoll  Milling  Machine  Co Rockford,  111 Winthrop  Ingersoll 

International  AchesonGraphiteCo. Niagara  Falls,  N.  Y.  .Acheson  Smith,  Frank  N. 

Coe 

International  Steam  Pump  Co ....  New  York F.  H.  Jones 

Interwoven  Mills,  Inc New  Brunswick,  N.  J.C.  S.  Van  Winkle 

Iowa  Warehouse  Company Waterloo,  la P.  U.  Kessler 

"Iron  Trade  Review" New  York C.  J.  Stark 

Irving  National  Bank New  York D.  H.  G.  Penny 

Jeffrey  Manufacturing  Company. .  Columbus,  O Malcolm  D.  Jeffrey 

Johns  Company,  The New  York R.  I.  Johns 

Johns- Manville  Company,  H.  W. .  New  York H.  M.  Shearer 

Johnson  &  Johnson New  Brunswick,  N.  J.D.  W.  Bulloch,  Chas.  A. 

McCormick 

"Journal  of  Commerce" New  York M.  J.  Hickey 

Kelly  Shoe  Company Rochester,  N.  Y F.  X.  Kelly 

Kern  Commercial  Company New  York M.  Greenebaum 

Keyless  Auto  Clock  Company. .  .  .  New  York J.  F.  Hennessey 

Keystone  Watch  Case  Company. .  Philadelphia,  Pa John  F.  Eisley 

King  Motor  Car  Company New  York W.  R.  Vogeler 

Knapp,  W.  G New  York James  M.  Morrow 

Knight,  Thomas  L New  York 

469 


International  Trade  Conference 


Organization  or  Company.  Address.  Representative. 

Kolynos  Company,  The New  Haven,  Conn. .  Joseph  A.  Aedo 

Koven  &  Brother,  L.  O New  York L.  O.  Koven 

Kranich  &  Bach New  York Herbert  Meldrum 

"La  Hacienda" Buffalo,  N.  Y A.  W.  V.  Bayard,  F.  G. 

Cooley 

Lake  Torpedo  Boat  Co Bridgeport,  Conn. . . .  Herbert  S.  Miller 

Lakewood  Engineering  Company .  Cleveland,  O D.  L.  Wadsworth 

Lamson  &  Goodnow  Mfg.  Co  ...  .Shelburne  Falls,  Mass.J.  W.  Thurber 

Lanston  Monotype  Machine  Co.  .Philadelphia,  Pa I.  F.  Scheeler 

"Las  Americas" New  York Julius  Moritzen 

Lawrence  Portland  Cement  Co. .  .  New  York Ernest  R.  Ackerman 

Le  Fevre  Company,  Josephine .  .  .  Philadelphia,  Pa Geo.  C.  Krusen 

Leeming  Company,  Thomas New  York A.  E.  Leeman 

Lehigh  Car  Wheel  &  Axle  Works .  Catasauqua,  Pa C.  R.  Rinehart 

Lehigh  Foundry Catasauqua,  Pa C.  R.  Rinehart 

Lembeck  &  Betz  Eagle  Brew'g  Co  .Jersey  City,  N.  J G.  W.  Lembeck 

Lloyd  Brazileiro New  York Arnold  Schott,   Benedicto 

Vieira 

Loeber  Company,  Henry  G New  York Henry  G.  Loeber 

Lovell  Manufacturing  Company. .  New  York H.  H.  Burtis 

Lowell  Paper  Tube  Corporation.  .Lowell,  Mass Capt.  Wm.  P.  White 

McGraw  Tire  &  Rubber  Co E.  Palestine,  O E.  A.  Ward 

Mallinckrodt  Chemical  Works. .  .St.  Louis,  Mo J.  H.  A.  Fink 

Manhattan  Electric  Supply  Co. .  .  New  York W.  F.  Melka 

Manufacturers  Ass'n  of  N.  J Trenton,  N.  J W.  C.  Billman 

"Manufacturers'  Record" Baltimore,  Md William  Edwards 

Marks  &  Clerk New  York Albert  E.  Parker 

Markt  Hammacher  &  Company.  .  New  York G.  Vintschger 

Mayor  of  the  City  of  New  York. .  New  York Hon.  Geo.  McAneny 

Mercantile  Bank  of  the  Americas  .  New    York R.    L.    Beausire,    Alfred 

Meyer,  Jason  A.  Neilson 

Merchants'  Ass'n  of  New  York . .  .  New  York Maurice      Coster,      Prof. 

Philip  B.  Kennedy,  Lu- 
cius R.  Eastman,  Jr., 
Wm.  H.  Douglas,  E.  A. 
de  Lima,  W.  H.  Ma- 
honey,  Geo.  H.  Richards, 
G.  Vintschger 

Merchants'  and  Mfrs.'  Ass'n Milwaukee,  Wis E.  J.  Hughes 

Mexican  Telegraph  Company. .  .  .  New  York B.  H.  Reynolds 

Michigan  Bolt  &  Nut  Works Detroit,  Mich F.  S.  Bigler 

Miller  Lock  Company Philadelphia,  Pa William  Ramsay 

Minot,  Hooper  &  Company New  York Edward  T.  Pickard 

Morse  Twist  Drill  &  Machine  Co .  New  Bedford,  Mass .  .  P.  I.  Fletcher 

Mosaic  Tile  Company Zanesville,  O R.     E.     Jordan,     H.     A. 

Ritchings 

Mott  Iron  Works,  J.  L New  York H.  C.  Beith,  Alfredo  Mir- 
anda 

Mueller  Mfg.  Company,  H Decatur,  111 Adolph  Mueller 

Nash,  Inc.,  Duane  H Millington,  N.  J Duane  H.  Nash 

National  Ammonia  Company.  . .  .Philadelphia,  Pa H.  Dannenbaum 

National  Ass'n  of  Credit  Men. .  .  .  New  York J.     H.     Tregoe,     Geo.    J. 

Althen,  Jas.  D.  Hopkins, 
James  Matthews,  Arthur 
L.  Myers,  C.  E.  Thomas 

National  Ass'n  of  Manufacturers .  New  York Represented  by  its  officers 

and  a  large  number  of 
its  members  from  many 
States 
National  Ass'n  of  Manufacturers 

of  Medicinal  Products Detroit,  Mich Chas.  A.  McCormick,  Os- 
car W.  Smith 
National  Ass'n  of  Master  Steam  & 

'     Hot  Water  Fitters New  York Henry  B.  Combers 

National  Bank  of  Commerce New  York Harry     P.     Barrand,     A. 

Hummel,  J.  E.  Roven- 
sky 

National  Carbon  Company LongIslandCity,N.Y.U.  S.  Kolby 

National  City  Bank New  York W.       S.       Kies,       James 

Thatcher,  Alexander 
Znamiecki 

470 


Countries,  Organizations  and  Companies 


Organization  or  Company.  Address.  Representative. 

National  Cloak  &  Suit  Company .  New  York F.   W.    Edgerton,    H     W 

Kirby 

National  Confectioners  Ass'n Cincinnati,  O Henry     Heide,     Jas.     G. 

Shaw,  Chas.  Triller 
National    Council    for    Industrial 

Defense Washington,  D.  C . .  Jas.  A.  Emery 

National  Foreign  Trade  Council.  . New  York Chas.  M.  Muchnic,  M.  A. 

Oudin,  Robt.  H.  Patchin, 
Daniel  Warren 
National    Implement    &    Vehicle 

Association Chicago,  111 Fred  H.  Bateman,  A.   B. 

Farquhar 

National  Lumber  Exporters'  Ass'nBaltimore,  Md R.  S.  Huddleston,  Wm.  K. 

Knox 

National  Marine  League  of  U.S.A.New  York P.  H.  W.  Ross,  C.  W.  Lee 

National  Merchant  Marine  Ass'n .  New  York J.  L.  Ewell 

National  Shawmut  Bank Boston,  Mass Benjamin  Joy 

National  Surety  Company New  York Paul  P.  Marcone 

National  Trunk  Mfrs.  Ass'n Cincinnati,  O Philip  F.  Hall 

Nebraska  Manufacturers  Ass'n. .  .Lincoln,  Neb H.  E.  Gooch 

Nevins  Church  Press  Company . .  .  New  York Gilbert  S.  Topka 

"Newark  Evening  News" Newark,  N.  J Wm.  F.  Collins 

New  Haven  Clock  Company New  Haven,  Conn. .  .S.  J.  Lower 

New  Jersey  Lime  Company New  York W.  P.  Hardenburgh,  Jr. 

New  Jersey  Zinc  Company New  York T.  A.  Bennett 

New  York   Board  of  Trade  and 

Transportation New  York Wm.  McCarroll 

"New  York  Evening  World" New  York John  G.  Holme 

"New  York  World" New  York E.  Justice 

Nicholas  Power  Company New  York Arthur  J.  Lang 

Nissen  &  Company,  Ludwig New  York Ludwig  Nissen 

Noel  News  Service New  York J.  V.  Noel 

North  Carolina  Pine  Ass'n Norfolk,  Va Charles     Hill,     Geo.     W. 

Jones 

Norton  Company Worcester,  Mass ....  Clifford  S.  Anderson,  Her- 
bert A.  Stanton,  R.  G. 
Williams 

Ober  Manufacturing  Company. .  . Chagrin  Falls,  O A.  M.  Ober 

Ohio  Paint  Mfrs.  Ass'n Cincinnati,  O Geo.  Debevoise 

Ohio  Suspender  Company Mansfield,  O H.  W.  Mateer 

Ohio  Valley  Ordnance  Co New  York Alden  S.  Condict 

Olds  Motor  Works Lansing,  Mich Walter  von  Zimmerman 

Oneita  Knitting  Mills Utica,  N.  Y Andrew  Frey 

Orr  &  Sembower New  York M.  Aviles,  C.  H.  Richard 

Otis  Elevator  Company New  York H.  W.  Burton 

Owens  Bottle  Machine  Co Toledo,  O Geo.  F.  Hodeil 

Packard  Motor  Car  Company New  York L.     S.     Doughty,    Phillip 

Mann,  I.  J.  Phelps 

Pan- American  Union Washington,  D.  C . .  .  W.  P.  Montgomery 

Parke,  Davis  &  Company Detroit,  Mich E.  G.  Swift,  John  J.  Doran 

Parker,  Stearns  &  Company Brooklyn,  N.  Y J.  Russell  Parker 

Pass  &  Seymour,  Inc Syracuse,  N.  Y John  W.  Brooks,  L.  John 

Bergman 

Patton  Paint  Company Newark,  N.  J Harold  B.  Gregory,  Peter 

Moora,    G.    D.    White, 
Fred  A.  Cass 

Patterson-Sargent  Company New  York D.  B.  Dennis.  J.  N.  Moore, 

J.  C.  Shaaff 

Peabody  &  Company,  Henry  W.  .  New  York C.  E.  Barry,  E.  L.  Richard- 
son 

Peck  &  Company,  William  E New  York Wm.    E.    Peck.    Wm.    C. 

Wulp 

Peck  &  Hills  Furniture  Co New  York R.  P.  Brumbaugh 

Pennsylvania  Railroad  Company  .New  York Geo.     D.    Dixon.     O.    T. 

Boyd,   D.   M.  Schraffer 

Perfection  Spring  Company Cleveland,  O H.  A.  Goddard 

Pfizer  &  Company,  Inc.,  Chas New  York I.  P.  Hetherman 

Phoenix  Chair  Company Sheboygan,  Wis A.  C.  Hahn 

Fierce-Arrow  Motor  Car  Co Buffalo,  N.  Y Lawrence  H.  Clarke 

Pittsburgh  Meter  Company E.  Pittsburgh,  Pa...  .T.  C.  Clifford 

Plant  Company,  Thomas  G Boston,  Mass F.  R.  Briggs,  Jaime  Ramos 

471 


International  Trade  •  Conference 


Organization  or  Company.  Address.  Representative, 

Post  &  Flagg New  York J.  D.  Gengler 

Pratt  Company,  B.  G New  York E.G.  Pratt 

Prentiss  Tool  &  Supply  Co New  York Henry  Prentiss 

Pusey  &  Jones  Company Wilmington,  Del.  .  .  .Elbert   H.    Neese,    Stirling 

H.  Thomas 
Ramapo  Iron  Works New  York Fred  W.  Snow,  Wm.  Wait 

Snow 
Read  &  Sons  Company,  Wm.  F.  .  .  New  York Wm.  F.  Read,  Jr.,  R.  L. 

Mclntosh 

Real  Lace  &  Novelty  Company .  .  New  York C.  Willis 

Remington  Oil  Engine  Company .  Stamford,  Conn F.  A.  Rumpf 

Remington  Typewriter  Company .  New  York Geo.  H.  Richards 

Ricca  &  Son New  York Hugo  F.  Ricca 

Richmond  Cedar  Works Richmond,  Va J.  Scott  Parrish 

Robinson  Clay  Products  Co New  York L.  I.  Foster 

Roessler&Hasslacher  Chemical  Co. New  York P.  Schlussner 

Root  Company,  A.  I Medina,  O W.  E.  Thprndyke 

Rosen  &  Company,  A.  W New  York M.  Epstein, 

Rubber  Club  of  America New  York Wm.  G.  Grieb,  Henry  D. 

Reed,  J.  Russell  Parker 
Russell  Mfg.  Co.,  The Middletown,  Conn. .  .S.   Russell,   Jr.,   F.   Acker 

Thompson 

St.  John  &  Company,  H.  W New  York John  H.  Hunter 

Safepack  Paper  Mills Brockton,  Mass D.  Goodman 

Sargent  &  Company New  Haven,  Conn. .  .Henry  B.  Sargent 

Scranton  Supply  &  Machinery  Co.  New  York W.  H.  Taylor 

Scripps-Booth  Company New  York Hilaire  J.  Holder 

Seabury  &  Johnson New  York Leopold  Croes 

Seamless  Rubber  Company New  Haven,  Conn. .  .W.  C.  Hutton 

Secretary  of  the  Treasury Washington,  D.  C. .  .R.   W.   Woolley,    Director 

of  the  Mint 

Sefton  Manufacturing  Company. .  Chicago,  111 J.  E.  Clenny 

Selby  Shoe  Company Portsmouth,  O Mark    W.    Selby,    J.    G. 

Tavares 

Sherwin-Williams  Company Cleveland,  O H.  L.  Gemberling 

Simonds  Mfg.  Co New  York O.  O.  Gallup 

Simpson  Sons  &  Company,  Wm.  .Philadelphia,  Pa Francis  A.  Webb 

Smith,  F.  G Brooklyn,  N.  Y Frank  G.  Smith 

South  American  Publishing  Co.  . . New  York Wing  B.  Allen,   Chas.   P. 

King 
Southern  Railway  Co.  and  Allied 

Lines Chattanooga,  Tenn .  .  Chas.  Lyon  Chandler 

Spartan  Tire  &  Rubber  Co.,  Inc .  .  New  York M.     Coleman,     Louis     G. 

Garrigan,  Harry  S.  Graff, 

O.  J.  Guzman 

Standard  Scale  &  Supply  Co New  York Jas  E.  Bryan 

Standard  Underground  Cable  Co .  Pittsburgh,  Pa Chas.  J.  Marsh 

Stanley  Works,  The New  Britain,  Conn.  .Edward  H.  Hart 

Star  Drilling  Machine  Company.  .Akron,  O Chas.  Robinson 

Stillman  Freckle  Cream  Co Aurora,  111 A.  L.  Bernard 

Stone  Printing  &  Mfg.  Co Roanoke,  Va Edward  L.  Stone 

Strecker  Bros.  Company Marietta,  O A.     H.     Strecker,     B.     F. 

Strecker 

Swett  Iron  Works,  A.  L Medina,  N.  Y F.  M.  Poler 

Tetlow  Manufacturing  Company .  Philadelphia,  Pa Clara  Tetlow  (Mrs.) 

Thomas  Iron  Company,  The Easton,  Pa Elbridge  Walker,   Willard 

M.  Wright 

Trenton  Potteries  Company Trenton,  N.  J John  A.  Campbell 

Triumph  Electric  Company Cincinnati,  O J.  S.  Louis 

Trunk  Manufacturer's  Ass'n Cincinnati,  O I.  Freedman 

Union  Carbide  Sales  Company .  .  .  New  York J.    R.    Crawford,    G.    C. 

Furness,    R.    G.    Noble, 

H.  Thompson 

Union  Drawn  Steel  Company.  .  .  .Beaver  Falls,  Pa Louis  W.  Williams 

United  Export  Bureau New  York Rodolfo  Ried 

United  Fruit  Company New  York E.   W.   Hanabergh,    B.   J. 

O'Keefe,  J.  T.  van  Ripir 
United  States  Mortgage  &  Trust 

Company New  York A.  Phillips 

472 


Countries,  Organizations  and  Companies 


Organization  or  Company.  Address.  Representative. 

United  States  Rubber  Export  Co., 

Ltd New  York John  D.  Clarke,  John  K. 

Coutant,  W.  H.  Gallag- 
her, Frederic  L.  Maxim, 
Wm.  L.  Procter,  James 
Riera,  John  B.  Tower 

United  States  Steel  Products  Co .  .  New  York T.   J.    Digan,    F.    E.    No- 
docker,  C.  E.  Thomas 

Upson  Nut  Company Cleveland,  O A.  Schoonmaker 

Valentine  &  Company New  York N.  T.  Pulsifer 

Vermont  Unfading  Green  Slate  Co.  Fair  Haven,  Vt J.  Pinckney  H.  Adams 

Waite-Thresher  Company Providence,  R.  I.  .  .  .Wm.  B.  Peck 

"Wall  Street  Journal" New  York J.  P.  Norton 

Wanamaker,  John New  York Ralph  Helmer 

Welch  Grape  Juice  Company Westfield,  N.  J R.  R.  Pelton 

Werner  &  Pfleiderer  Company.  .  .Saginaw,  Mich F.  H.  Banbury,  E.  Schiller 

West  Disinfecting  Company New  York Alfred  Batch 

Western  Union  Telegraph  Co New  York Martin   J.    Brooks,    P.   J. 

Casey,    C.    B.    McCann 

Westinghouse  Electric  &  Mfg.  Co. New  York Maurice     Coster,     F.     A. 

Booth 
Westinghouse  Machine  Company. E.  Pittsburgh,  Pa.. .  .Maurice  Coster 

White  Dental  Mfg.  Co.,  S.  S Philadelphia,  Pa Geo.  R.  Coleman 

White  Rock  Mineral  Springs  Co.  .  Waukesha,  Wis J.  W.  Milroy,  J.  C.  Watson 

Whiting  &  Davis  Company Plainville,  Mass B.  S.  Gardiner,  W.  L.  Rice 

Wiggin's  Sons  Company,  H.  B. .  .Bloomfield,  N.  J R.  H.  Wiggins 

Wolverine  Brass  Works Grand  Rapids,  Mich .  L.  A.  Cornelius 

Wood  Drill  Works Paterson,  N.  J Pablo  Horns 

Wood  Mosaic  Company Louisville,  Ky Wm.  A.  MacLean 

Wood  Shovel  &  Tool  Company. .  .  Piqua,  O H.  K.  Wood,  H.  P.  Belt 

World  Postal  League New  York James  L.  Cowles 

"World's  Work" New  York James  R.  Merriam 

Yale  &  Towne  Mfg.  Company.  .  .Stamford,  Conn Walter  C.  Allen,  Chas.  W. 

Beaver,  J.  L.  Thompson 
Yawman  &  Erbe  Mfg.  Company.  .Rochester,  N.  Y H.  P.  Rockwell,  R.  E.  Rose 


473 


International  Trade  Conference 


DELEGATES    AND    GUESTS 

who  attended  the 

INTERNATIONAL  TRADE  CONFERENCE 

December  6-7-8,  1915 

Individual.  Address.  Representing. 

Abbott,  Henry New  York Calculagraph  Co. 

Ackerman,  Ernest  R New  York Lawrence   Portland    Cement    Co. 

Association  of  American  Portland 

Cement  Mfrs.,  Philadelphia,  Pa. 

Adams,  J.  Pinckney  H. . .  .Fairhaven,  Vt Vermont  Unfading  Green  Slate  Co. 

Aedo,  Joseph  A New  Haven,  Conn. .  .  The  Kolynos  Co. 

Aisenman,  W New  York National  Association  of  Mfrs. 

Allen,  H.  D Detroit,  Mich 

Allen,  H.  L New  York National  Association  of  Mfrs. 

Allen,  Walter  C Stamford,  Conn Yale  &  Towne  Mfg.  Co. 

Allen,  Wing  B New  York South  American  Publishing  Co. 

Althen.  George  J New  York National   Ass'n    of    Credit    Men, 

Driver  Harris  Wire  Co.,  Harrison, 
N.  J. 

Ambedkar,  B.  R Baroda,  India With  N.  M.  Marshall,  New  York 

Anderson,  Clifford  S Worcester,  Mass.  .  .  .Norton  Company 

Andrew,  Lieutenant Trenton,  N.  J Fisher  &  Norris 

Andrew,  Mrs Trenton,  N.  J Fisher  &  Norris 

Ashmun,  Charles Newark,  N.  J P.  Ballantine  &  Sons 

Aspegren,  John New  York General    Export    Association     of 

Sweden,  Stockholm,  Sweden 

Aviles,  M New  York Orr  &  Sembower 

Ayres,  Howard New  York Cotton  Goods  Export  Association 

of  New  York 

Baker,  B.  N Baltimore,  Md 

Baker,  S.  R Newark,  N.  J Baker  Printing  Company 

Bamberger,  Chas.  A Wilmington,  Del.  .  .  .Jos.  Bancroft  &  Sons  Company 

Banbury,  F.  H Saginaw,  Mich Werner  &  Pfleiderer  Company 

Bannon,  J.  W.,  Jr Portsmouth,  O Excelsior  Shoe  Company 

Barnaud,  Albert  J New  York Bureau  of  Foreign  and  Domestic 

Commerce 

Barrand,  Harry  P New  York National  Bank  of  Commerce 

Barrett,  N.  R New  York "El  Comercio" 

Barry,  C.  E New  York Henry  W.  Peabody  &  Company 

American  Exporters  &  Importers 

Association 

Bartlett,  Dudley Philadelphia,  Pa Philadelphia  Commercial  Museum 

Barton,  Fred Shanghai,  China 

Batch,  Alfred New  York West  Disinfecting  Company 

Bateman,  Fred  H Grenloch,  N.  J Bateman  Mfg.  Co. 

National    Implement    &    Vehicle 

Association,  Chicago,  111. 

Bayard,  A.  W Buffalo,  N.  Y "La  Hacienda" 

Bayi,  James  H Philadelphia,  Pa Alexander  Brothers 

Beausire,  R.  L New  York Mercantile  Bank  of  the  Americas, 

New  York 
Banco  del  Peru  y  Londres,  Lima, 

Peru 

Beaver,  Chas.  W New  York Yale  &  Towne  Mfg.  Company 

Beckwith,  Holmes New  York 

Behr,  Alexander  W Moscow,  Russia Russian- American     Chamber     of 

Commerce 

Beiswanger,  John Steubenville,  O Gill  Bros.  Company 

Beith,  H.  C New  York J.  L.  Mott  Iron  Works 

Bell,  James  C.,  Jr New  York Columbia  University 

Bell,  J.  P New  York Candian     Bank     of     Commerce, 

»  Toronto,  Canada 

Belt,  H.  P Piqua,  O Wood  Shovel  &  Tool  Company 

Bennett,  T.  A New  York New  Jersey  Zinc  Company 

Benney,  William  M New  York National  Association  of  Mfrs. 

Benson,  Joseph  C New  York Dwight  &  Lloyd  Sintering  Co. 

Berendnes,  E.  M Amsterdam,  Holland. Amsterdam  Epl.  My. 

474 


Delegates  and  Guests 


Individual.  Address.  Representing. 

Bergman,  L.  John Solvay,  N.  Y Pass  &  Seymour,  Inc. 

Bernard,  A.  L Aurora,  111 Stillman  Freckle  Cream  Company 

Bhatena,  N.  M Bombay,  India With  N.  M.  Marshall,  New  York 

Bigler,  F.  S Detroit,  Mich Michigan  Bolt  &  Nut  Works 

Billman,  W.  C Trenton,  N.  J Manufacturers  Association  of  New 

Jersey 

Bird,  J.  P New  York National  Association  of  Mfrs. 

Bishop,  W.  P Milwaukee,  Wis Chamber  of  Commerce 

Blackmore,  J.  J New  York American   Society   of   Heating   & 

Ventilating  Engineers 

Blackwell,  H.  C New  York N.  M.  Marshall 

Blanchard,  J.  Cliff New  York Isaac  H.  Blanchard  Company 

Blanco,  Francisco New  York Consulate-General  of  Spain 

Bloom,  E.  E New  York Haynes  Auto  Company 

Bogart,  Gilbert  B New  York Hodenpyl  Hardy  &  Co.,  Inc. 

Bomer,  W.  L Brooklyn,  N.  Y Bristol-Myers  Company 

Bonaschi,  Dr.  Albert  C. .  .  New  York Italian    Chamber    of    Commerce, 

New  York 
Chamber    of    Commerce,    Rome, 

Italy 

Booth,  Fred Firthcliffe,  N.  Y Firth  Carpet  Company 

Booth,  F.  A New  York Westinghouse  Electric  &  Mfg.  Co. 

Borrowman,  Peter New  York International  Trading   Company, 

Calcutta,  India 

Bostwick,  L.  C New  York 

Bottino,  William  A New  York National  Association  of  Mfrs. 

Boudinot,  Geo.  S New  York National  Association  of  Mfrs. 

Bowski,  G Brooklyn,  N.  Y Bristol-Myers  Company 

Boyd,  O.  T New  York Pennsylvania  R.  R.  Company 

Boyer,  A.  E Cleveland,  O 

Bradford,  H.  S New  York American  Pad  &  Paper  Company 

Bragado,  James Barcelona,  Spain ....  Hijos  de  Antonio  Feliu    .. 

Brandes,  C.  O Akron,  O Firestone  Tire  &  Rubber  Company 

Briggs,  F.  R Boston,  Mass Thos.  G.  Plant  Company 

Brill,  S.  S Boston,  Mass "Boot  &  Shoe  Recorder" 

Britton,  Mason New  York Hill  Publishing  Company 

Britton,  S New  York Brown  Export  Company 

Brooks,  John  W Syracuse,  N.  Y Pass  &  Seymour,  Inc. 

Syracuse  Chamber  of  Commerce 

Brooks,  Martin  J New  York Western  Union  Telegraph  Co. 

Brown,  C.  F Groton,  N.  Y Corona  Typewriter  Company,  Inc. 

Brown,  J.  Wylie Constantinople,  American  Chamber  of  Commerce 

Turkey for  the  Levant 

Brown,  L.  P New  York 

Brumbaugh,  R.  P New  York Peck  &  Hills  Furniture  Company 

Bryan,  James  E New  York Standard  Scale  &  Supply  Co. 

Buckley,  William  K Buffalo,  N.  Y Beaver  Board  Company 

Bulloch,  D.  N New  Brunswick,  N.J.Johnson  &  Johnson 

Bunbury,  C.  J New  York Crex  Carpet  Company 

Burke,  Harry New  York National  Association  of  Mfrs. 

Burns,  R.  G Buffalo,  N.  Y Beaver  Board  Company 

Burt,  E.  W Philadelphia,  Pa S.  L.  Allen  &  Company 

Burtis,  H.  H New  York Loyell  Mfg.  Company,  Erie,  Pa. 

Burton,  H.  W New  York Otis  Elevator  Company 

Butler,  J.  A Hartford,  Conn Franklin  Electric  Mfg.  Company 

Caballcro,  Agustin  Nieto. .  Bogota,  Colombia .  .  .  Camara    de     Comercio,     Bogota, 

Colombia 
Banco       de        Bogota,      Bogota, 

Colombia 

Cagmy,  T.  Geo.,  Jr New  York 

Calkins,  Ira  R Quincy,  111 Electric  Wheel  Company 

Camp,  Jonathan Hartford,  Conn Franklin  Electric  Mfg.  Company 

Campbell,  John  A Trenton,  N.  J The  Trenton  Potteries  Company 

Carr,  James  A Richmond,  Ind American  Adding  Mch.  Company 

Carrasco,  Eduardo New  York 

(Commercial  delegate  of  Chile  to  the  United  States.) 

Casasus,  Hector  T New  York " Continental" 

Casey,  P.  J New  York Western  Union  Telegraph  Co. 

Cass,  Fred  A Newark,  N.  J Patton  Paint  Company 

Castillo,  Raphael  del New  York Camara   de   Comercio   de   Carta- 
gena, Colombia 

475 


International  Trade  Conference 


Individual.  Address.  Representing. 

Caswell,  John  P New  York W.  R.  Grace  &  Company 

Ceyelin,  Anthony  L Philadelphia,  Pa Stanley  G.  Flagg  &  Company 

Chadwick,  C Jamestown,  N.  Y Art  Metal  Construction  Company 

Chamorro,  Emiliano Washington,  D.  C.  .  .Nicaraguan  Legation 

(Minister  of  Nicaragua) 
Chandler,  Chas.  Lyon. . .  .  Chattanooga,  Term.  .Southern  Ry.  Co.  &  Allied  Lines 

Clark,  A.  P Wilmington,  Del .... 

Clark,  Allen  W St.  Louis,  Mo "American  Paint  &  Oil  Dealer" 

Clarke,  John  D New  York U.  S.  Rubber  Export  Co.,  Ltd. 

Clarke,  Lawrence  H Buffalo,  N.  Y Pierce- Arrow  Motor  Car  Co. 

Clenny,  J.  E Chicago,  111 Sef ton  Mfg.  Company 

Clifford,  T.  C E.  Pittsburgh,  Pa.  .  .Pittsburgh  Meter  Company 

Coe,  Frank  N Niagara  Falls,  N.  Y. .  International    Acheson    Graphite 

Company 

Coleman,  Geo.  R Philadelphia,  Pa S.  S.  White  Dental  Mfg.  Company 

Coleman,  — New  York Spartan  Tire  &  Rubber  Co.,  Inc. 

Coleman,  T.  L Akron,  O Goodyear  Tire  &  Rubber  Co. 

Collins,  Wm.  F Newark,  N.  J " Newark  Evening  News" 

Condict,  Alden  S New  York. Ohio  Valley  Ordnance  Company 

Cooley,  F.  G New  York "La  Hacienda " 

Cooley,  I.  G New  York The  Columbia  Mills,  Inc. 

Cornelius,  L.  A Grand  Rapids,  Mich.Wolverine  Brass  Works 

Correa,  Eduardo New  York Antioquia  Commercial  Corp'n. 

Banco  Central,  Bogota,  Colombia 
Banco       de       Sucre,       Medellin, 
Colombia 

Corse,  G.  H.,  Jr Chicago,  111 

Corwu,  E.  H.  Lewinski.  .  .New  York 

Cosby,  Joseph  F New  York National  City  Bank 

Banco  Comercial  de  Barranquilla, 
Colombia 

Coster,  Maurice New  York Westinghouse  Electric  &  Mfg.  Co. 

Westinghouse  Machine  Company 
Merchants  Association  of  N.  Y. 

Coutant,  John  K New  York U.S.  Rubber  Export  Co.,  Ltd. 

Cowles,  James  L New  York World  Postal  League 

Coyne,  Arthur Perth,  Australia Australian  Cadets 

Crane,  C.  Sidney New  York National  Association  of  Mfrs. 

Crawford,  J.  R New  York Union  Carbide  Sales  Company 

Cremer,  H.  R New  York Russo- American  Commercial  Co. 

Croes,  Leopold New  York Seabury  &  Johnson 

Cropley,  R.  E New  York Bond  &  Goodwin 

Crosman,  George  L Portland,  Me G.  A.  Crosman  &  Sons  Company, 

Portland,  Me. 
Maine    State    Board    of    Trade, 

Bangor,  Me. 
Chamber  of  Commerce,  Portland 

Csesznak,  Steven  de New  York Steven  de  Csesznak,  Inc. 

Currier,  John  R New  York Brown  Bros.  &  Company 

Curtis,  Harry  B Bridgeport,  Conn Bridgeport  Hardware  Mfg.  Corp'n 

Dannenbaum,  H Philadelphia,  Pa National  Ammonia  Co.,  Phila.,  Pa. 

American  Ass'n  of  Refrigeration, 
Chicago,  111. 

Dannenbaum,  Walter ....  Philadelphia,  Pa National  Ammonia  Co. 

Darville,  E.  H New  York "Hardware  Age" 

Debevoise.  George Cincinnati,  O Ohio  Paint  Mfrs.  Association 

DeBow,  W.  C New  York National  Association  of  Mfrs. 

Delgado,  D.  E Rochester,  N.  Y Eastman        Kodak        Company. 

Rochester,  N.  Y. 

Chamber         of          Commerce, 

Rochester,  N.  Y. 

Demarest,  H.  S New  York Greene,  Tweed  &  Co.,  New  York 

Dennis,  D.  B New  York Patterson-Sargent  Company 

Dibert,  H.  M Troy,  N.  Y W.  &  L.  E.  Gurley 

Digan,  T.  J New  York United  States  Steel  Products  Co. 

Ditchett,  S.  H New  York " Dry  Goods  Economist" 

Dixon,  George  Dallas ....  Philadelphia,  Pa Pennsylvania  Railroad  Company 

Donegani,  D.  E Leghorn,  Italy Louis  Donegani 

Donnelly,  James  A New  York American   Society   of   Heating   & 

Ventilating  Engineers 
Doran,  John  J New  York Parke,  Davis  &  Company 

476 


Delegates  and  Guests 


Individual.  Address.  Representing. 

Doughty,  L.  S New  York Packard  Motor  Car  Company 

Douglas,  E.  V New  York American  Mfrs.  Export  Ass'n 

Douglas,  Wm.  H New  York Merchants  Ass'n  of  New  York 

Downer,  C.  D Aurora,  111 Aurora  Laboratories  Company 

Eastman,  Lucius  R.,  Jr. .  .  New  York Merchants  Ass'n  of  New  York 

Eberhardt,  George  G New  York Henry  Heide 

Edgerton,  F.  W New  York National  Cloak  &  Suit  Company 

Edwards,  William Baltimore,  Md "Manufacturers'  Record" 

Egan,  Martin Manila,  P.  I Manila  Merchants  Association 

Eisley,  John  P Philadelphia,  Pa Keystone  Watch  Case  Company 

Emery,  James  A Washington,  D.  C. .  .  National    Council    for    Industrial 

Defense 

Epstein,  M New  York A.  W.  Rosen  &  Company 

Erickson,  O.  T Boston,  Mass The  Carter's  Ink  Company 

Escobar,  Francisco New  York Chamber  of  Commerce  of  Bogota, 

Colombia 

Ewell,  J.  L, New  York National  Merchant  Marine  Ass'n. 

Falcon,  Alberto New  York W.  R.  Grace  &  Company 

Chamber    of    Commerce,     Lima, 

Peru 
Chamber  of  Commerce,  Arequipa, 

Peru 

Farquhar,  A.  B York,  Pa A.  B.  Farquhar  &  Company 

Chamber    of    Commerce    of    the 

United  States  of  America 
National    Implement    &    Vehicle 

Association,  Chicago,  111. 

Fassett,  W.  F Ansonia,  Conn Ansonia  O.  &  C.  Company 

Ferguson,  James  F Washington,  D.  C.  .  .Department  of  Commerce 

Feuss,  Major  Andrew  W.  .  New  York J.  A.  Fay  &  Egan  Company,  Cin- 
cinnati, O. 
Fiala,  Rudolf New  York Diamond  Crystal  Salt  Company, 

St.  Clair,  Mich. 

Fibein,  — Paris,  France Banque  Nationale  de  Credit 

Finch,  E.  S.,  Jr New  York Binney  &  Smith  Company 

Fink,  J.  H.  A St.  Louis,  Mo Mallinckrodt  Chemical  Works 

Firestone,  R.  J Akron,  O Firestone  Tire  &  Rubber  Company 

Fisher,  A.  M Washington,  D.  C.  .  . 

Fisk,  Harvey  E.,  Jr New  York Harvey  Fisk  &  Sons 

Flagg,  Stanley  G.,  Jr Philadelphia,  Pa Stanley  G.  Flaga,  °-  Company 

Fleming,  W.  B Washington,  D.  C.  .  .Department  of  State 

Fletcher,  P.  I New  Bedford,  Mass.  .  Morse  Twist  Drill  &  Machine  Co. 

Foot,  Edward  H New  York 

Foster,  L.  I New  York Robinson  Clay  Products  Company 

Pournel,  Henri New  York Banque  Franco-Japonaise,  Paris 

Fraser,  C.  K New  York Fraser,  Turk  &  Myers 

Freedman,  I New  York Berner  &  Freedman,  Inc. 

Trunk  Manufacturers  Association, 

Cincinnati,  O. 

Frey,  Andrew Utica,  N.  Y Oneita  Knitting  Mills 

Frothingham,  Donald ....  New  York American  Express  Company 

Furness,  G.  C New  York Union  Carbide  Company 

Gallagher,  W.  H New  York U.S.  Rubber  Export  Co.,  Ltd. 

Galliver,  Geo.  O New  York Federal  Utilities,  Inc. 

Gallup,  O.  O New  York Simonds  Mfg.  Company 

Gama,  Domicio  da Washington,  D.  C.  .  .Brazilian  Embassy 

(Ambassador  of  Brazil) 

Gardiner,  B.  S Plainville,  Mass Whiting  &  Davis  Company 

Garfield,  J.  B New  York Garfield  &  Company 

Garrigan,  Louis  G New  York Spartan  Tire  &  Rubber  Company 

Gash,  Joseph  G New  York American  Cotton  Oil  Company 

Gatteschi,  Count  Riccardo. New  York Chamber  of  Commerce  of  Naples, 

Italy 

Gaylord,  L.  L Hartford,  Conn Capewell  Horse  Nail  Company 

Geisler,  L.  R New  York Columbia  University 

Gemberling,  H.  L Newark,  N.  J Sherwin-Williams       Company. 

Cleveland,  Ohio 

Gengler,  J.  D New  York Post  &  Flagg 

Gessert,  Chas.  F Jersey  City Davis-Bournonville  Company 

Gest,  G.  M New  York With  N.  M.  Marshall 

Gibbs,  J.  B.  J Yokohama,  Japan . .  . 

477 


International  Trade  Conference 


Individual.  A  ddress.  Representing. 

Gibson,  George  C Philadelphia,  Pa Philadelphia  Commercial  Museum 

Gladding,  Nelson  A Indianapolis,  Ind .  .  .  .E.  C.  Atkin  &  Company 

Glasel,  I.  W New  York Board  of  Foreign  Missions,  Meth- 
odist Episcopal  Church 

Goddard,  H.  A Cleveland,  O The  Perfection  Spring  Company 

Goldey,  Louis New  York National  Association  of  Mfrs. 

Goldsmith,  Miss  L.  A ....  New  York Aeolian  Company 

Gombers,  Henry  B New  York National  Ass'n   Master  Steam  & 

Hot  Water  Fitters 

Gonzales,  V New  York National  Association  of  Mfrs. 

Gonzales  Z.,  Manuel New  York Camara    de    Comercio    de    Costa 

Rica,  San  Jos6,  C.  R. 

Gooch,  H.  E Lincoln,  Neb Nebraska  Mfrs'.  Association 

Goodall,  Louis  B Sanford,  Me Maine    State    Board    of    Trade, 

Bangor,  Me. 

Goodhue,  F.  Abbot Boston,  Mass First  National  Bank,  Boston 

Goodman,  D Brockton,  Mass Safepack  Paper  Mills 

Goodrich,  Joseph  K New  York National  Association  of  Mfrs. 

Goodrich,  Wm.  O Milwaukee,  Wis Wm.  Goodrich  &  Company 

Graff,  Harry  S New  York Spartan  Tire  &  Rubber  Co.,  Inc. 

Grant,  H.  M Wilmington,  Del .  .  .  .American  Vulcanized  Fibre  Co. 

Green,  C.  A New  York R.  G.  Dun  &  Company 

Green,  F.  E New  York Fearon,  Brown  Company 

Greenebaum,  M New  York Kern  Commercial  Company 

Gregg,  L.  D Hackensack,  N.  J.  .  .The  Gregg  Company,  Ltd. 

Gregory,  E.  Cortes Colombia 

Gregory,  Harold  B New  York Patton  Paint  Co.,  Newark,  N.  J. 

Gribben,  H.  K New  York With  N.  M.  Marshall 

Grieb,  William  G New  York Rubber  Club  of  America 

Guerin,  M.  J New  York Guerin     &     Company,     Rio     de 

Janeiro,  Brazil 

Guiterman,  P.  L New  York Guiterman,  Rosenfeld  &  Company 

Guzman,  O.  J Trenton,  N.  J Spartan  Tire  &  Rubber  Company 

Hahn,  A.  C Sheboygan,  Wis Phoenix  Chair  Company 

Haines,  Robert  F Brooklyn,  N.  Y 

Hall,  J.  B Chicago,  111 

Hall,  Philip  F New  York National  Trunk  Mfrs.  Association, 

Cincinnati,  O. 

Hall,  W.  W Chicago,  111 Chicago,  Milwaukee  &  St.  Paul  Ry. 

Halsey,  Wm.  I New  York Esterbrook  Steel  Pen  Company 

Hanabergh,  E.  W New  York United  Fruit  Company 

Hanlin,  M.  L Buchanan,  Mich  ....  Celfor  Tool  Company 

Hansen,  K.  A.  Friis Copenhagen, 

Denmark Russisk  Handels  Company 

Hardenburgh,  W.  P.,  Jr.  .  . New  York New  Jersey  Lime  Company 

Hardy,  W.  N New  York Brown  Bros.  &  Company 

Hart,  Edward  H New  Britain,  Conn .  .The  Stanley  Works 

Hart,  Norman  G New  York Royal  Bank  of  Canada,  Montreal, 

Canada 

Haspel,  M.  B Philadelphia,  Pa Thos.  Devlin  Mfg.  Company 

Hastings,  B New  York "Dry  Goods  Economist " 

Hauss,  Carl  L Milan,  Italy 

Hauss,  Chas.  F Milan,  Italy American  Chamber  of  Commerce 

Haviland,  E.  F New  York Haviland  Shade  Roller  Company 

Hay,  Thomas  A.  H Easton,  Pa Easton  Board  of  Trade 

Hazard,  H.  R New  York "Export  American  Industries" 

Heckendorn,  H.  F New  York Binney  &  Smith  Company 

Heide,  Henry New  York National    Confectioners    Associa- 
tion, Cincinnati,  O. 
Henry  Heide 

Heide,  Henry,  Jr New  York Henry  Heide 

Heilmann,  M New  York French  Dept.  of  Foreign  Affairs 

Heisey,  A.  H Newark,  O A.  H.  Heisey  &  Company 

Helmer,  Ralph New  York John  Wanamaker 

Hennessey,  J.  F New  York Keyless  Auto  Clock  Company 

Hensel,  Geo.  F New  York Havas  Agency,  Chile 

Hetherman,  I.  F New  York Chas.  Pfizer  &  Company,  Inc. 

Heymann,  Joseph  W New  York Isaac  Brandon  &  Bros. 

Panama  Association  of  Commerce, 

Panama 
Hickey,  Michael  J New  York "Journal  of  Commerce" 

478 


Delegates  and  Guests 


Individual.  Address.  Representing. 

Hickey,  P.  A East  Orange,  N.  J.  . . 

Higby,  Fred  H New  York 

Higginson,  Eduardo New  York Camara    de    Comercio    de    Lima 

Peru 

Hill,  Chas New  York A.  C.  Tuxbury  Lumber  Company 

North  Carolina  Pine  Association, 

Norfolk,  Va. 

Hobbs,  W.  F Bridgeport,  Conn. .  .  .  Bridgeport  Hardware  Mfg.  Corp'n. 

Hobe,  E.  H Chicago,  111 American- Norwegian  Chamber  of 

Commerce 

Hodell,  Geo.  F Toledo,  O Owens  Bottle  Machine  Company 

Holder,  Hilaire  J New  York Scripps-Booth  Company 

Hollingsworth,  W.  G.  P. . .  New  York American  Chamber  of  Commerce, 

Paris,  France 

Holme,  John  G New  York "New  York  Evening  World" 

Homs,  Pablo New  York Wood  Drill  Works,  Paterson,  N.  J. 

Hopkins,  James  D New  York L.  F.  Dommerich  &  Company 

National  Association  of  Credit 

Men,  N.  Y. 

Hough,  B.  Olney New  York "American  Exporter" 

Houston,  R.  L New  York Computing -Tabulating -Recording 

Company 

Huber,  Edward  E Brooklyn,  N.  Y Eberhard  Faber 

Huddleston,  R.  S New  York Huddleston- Marsh  Mahogany  Co. 

National  Lumber  Exporters'  Asso- 
ciation, Baltimore,  Md. 

Hughes,  E.  J Milwaukee,  Wis First  National  Bank 

Merchants  &   Mfr's.  Association, 

Milwaukee,  Wis. 

Hummel,  A New  York National  Bank  of  Commerce 

Hunter,  John  H New  York H.  W.  St.  John  &  Company 

Huston,  C.  H Chattanooga,  Tenn.  .  Chattanooga  Mfr's.  Association 

Hutton,  W.  C New  Haven,  Conn. .  .  Seamless  Rubber  Company 

Imboden,  D.  C New  York 

Imchanitzky,   Michael  J.  .  Moscow,  Russia Russian  Agricultural  Society 

Ingersoll,  Winthrop Rockford,  111 Ingersoll  Milling  Machine  Co. 

Iverson,  Geo.  D.,  Jr Baltimore,  Md The  American  Belting  Companies 

'effrey,  Malcolm  D Columbus,  O Jeffrey  Mfg.  Company 

'enks,  Prof.  Jeremiah  W. .  New  York New  York  University 

ohnes,  Chas.  B Newark,  N.  J Benjamin  &  Johnes 

Johns,  R.  I New  York The  Johns  Company 

Johnson,  Emory  R Philadelphia,  Pa University  of  Pennsylvania 

Johnston,  Percy  H Louisville,  Ky Louisville  Board  of  Trade 

Jones,  F.  H New  York International  Steam  Pump  Co. 

Jones,  Geo.  W New  York North  Carolina  Pine  Association, 

Norfolk,  Va. 

Jordan,  R.  E Zanesville,  O Mosaic  Tile  Company 

Joy,  Benjamin Boston,  Mass National  Shawmut  Bank 

Judge,  Edward  A Springfield,  Mass. .  .  .American  Saw  &  Mfg.  Company 

Junod,  Louis  H New  York Consulate  of  Switzerland 

Jureidini,  Elie  K New  York A.  N.  Jureidini  &  Bros.,  Cebu,  P.  I. 

Justice,  E New  York "The  World" 

Kahler,  Hugh  M New  York 

Keegan,  Joseph  J New  York Gaston,  Williams  &  Wigmore,  Inc. 

Keith,  Edward  A Brockton.  Mass 

Kelly,  Arthur  W Philadelphia,  Pa Ass'n.  of  Portland  Cement  Mfrs. 

Kelly,  F.  X Rochester,  N.  Y Kelly  Shoe  Company 

Kelly,  R.  R New  York Beckwith-Chandler  Company 

Kennedy,  Harry  B New  Haven,  Conn. .  .  Hoggson  &  Pettis  Mfg.  Company 

Kennedy,  Philip  B New  York Merchants  Ass'n.  of  New  York 

Kenney,  Ellwood New  York Esterbrook  Steel  Pen  Company 

Keough,  F.  W New  York "American  Industries" 

Kessler,  P.  U Waterloo.  Iowa Iowa  Warehouse  Company 

Kibbe,  Wm.  V New  York 

Kies,  William  S New  York National  City  Bank 

King,  Chas.  P New  York South  American  Publishing  Co. 

King,  Robert  N New  York Earle  &  Wilson 

Kirby,  John,  Jr Dayton,  O Dayton  Mfg.  Company 

Kirby,  H.  S New  York National  Cloak  &  Suit  Company 

Kiret'chjian,  Herant  M  .  .  .  New  York Persian  Consulate-General 

Kitchel,  A.  F New  York Binney  &  Smith  Company 

479 


International  Trade  Conference 


Individual.  Address.  Representing 

Klein.  R New  York 

Klypser,  M New  York 

Knight,  Thomas  L New  York Thomas  L.  Knight 

Knox,  E.  C Akron,  O Firestone  Tire  &  Rubber  Company 

Knox,  Wm.  K New  York National  Lumber  Exporters  Asso- 
ciation, Baltimore,  Md. 

Kolby,  U.  S Long  Island  City. .  .  .  National  Carbon  Company 

Koven,  L.  O New  York L.  O.  Koven  &  Bro. 

Kraticks,  G Brussels,  Belgium. . . . 

Kruming,  M.  J New  York 

Krusen,  Geo.  C Philadelphia,  Pa Josephine  Le  Fevre  Company 

Kryshtofovich,  Dr. 

Theodor Petrograd,  Russia.  .  .Russian  Ministry  of  Agriculture 

LaGro,  W Shanghai,  China Nederlandsche         Handel-Maats- 

chappij,  Amsterdam,  Holland 

Lamont,  R.  P Chicago,  111 Illinois  Mfr's.  Association 

Lamport,  Arthur  M San  Juan,  P.  R Chamber  of    Commerce   of   Porto 

Rico 

Lang,  Arthur  J New  York Nicholas  Power  Company 

Lange,  E Copenhagen Aarbye  &  Lange 

Larrazabal,  M.  Escobar. .  .  New  York (of  Colombia) 

Lassner,  S New  York "Export  American  Industries" 

Laterman,  Edw.  J Philadelphia,  Pa Milton  Hagy  Waste  Works 

Lee,  C.  W New  York National  Marine  League 

Leeman,  A.  E New  York Thos.  Leeming  Company 

Leeuw,  S.  de New  York 

Lehrs,  John  A Moscow,  Russia Henry  A.  Lehrs 

Lembeck,  G.  W Jersey  City,  N.  J. .  .  .Lembeck  &  Betz  Eagle  Brew'g  Co. 

Levi,  Raphael  Z Yokohama,  Japan . .  .  Shimidzu,  Levi  &  Soriana 

Lewery,  L.  J Middletown,  0 American  Rolling  Mill  Company 

Lewis,  Harrison  C New  York National  Paper  &  Type  Company 

Lewis,  H.  H Washington,  D.  C . . . 

Liggett,  Miss  G New  York French  &  Ward 

Lima,  E.  A.  de New  York Battery  Park  Nat'l  Bank 

Banco  Comercial  de  Barranquilla, 
Colombia 

Merchants  Association  of    N.  Y. 

Lindo,  Daniel Bahia,  Brazil Camara  de  Comercio 

Ling,  Ernest  E New  York National  City  Bank 

Little,  Halsted Detroit,  Mich Detroit  Twist  Drill  Company 

Lockwood,  R.  M Detroit,  Mich Federal  Motor  Truck  Company 

Loeber,  Henry  G New  York Henry  G.  Loeber  Company 

Lokrantz,  John New  York Swedish  Chamber  of  Commerce 

Gen'l  Export  Ass'n  of  Sweden 

Long,  Geo.  E Jersey  City,  N.  J. .  .  .Jos.  Dixon  Crucible  Company 

Louis,  J.  S Cincinnati,  O Triumph  Electric  Company 

Lowe,  Francis  J New  York "Export  American  Industries" 

Lower,  S.  J New  Haven,  Conn. .  .  New  Haven  Clock  Company 

MacLean,  J.  B Toronto,  Canada.  . .  . 

MacLean,  William  A Louisville,  Ky Wood  Mosaic  Company 

MacPherson.  F.  H Detroit,  Mich Detroit  Sulphite  Pulp  &  Paper  Co. 

McAneny,  George New  York The  Mayor  of  New  York 

(Acting  Mayor) 

McCann,  C.  B New  York Western  Union  Telegraph  Co. 

McCarroll,  William New  York New    York    Board    of    Trade    & 

Transportation 

McCartney,  J.  W New  York The  Bessemer  Gas  Engine  Co. 

McClellan,  H.  B New  York 

McConnell,  R.  M Akron,  O Firestone  Tire  &  Rubber  Company 

McCormick,  Chas.  A New  Brunswick,  N.  J.Johnson  &  Johnson 

National  Ass'n  of  Mfrs.  of  Medi- 
cinal Products,   Detroit,   Mich. 

McDonald,  H.  W New  York The  Columbia  Mills,  Inc. 

MacFadyean,  J.  C Akron,  O Goodyear  Tire  &  Rubber  Co. 

McGrath,  Louis  J Philadelphia,  Pa Thomas  Devlin  Mfg.  Co. 

Mclntosh,  R.  L Philadelphia,  Pa Wm.  F.  Read  &  Sons  Company 

McKenna,  Frank  B New  York Atlas  Portland  Cement  Co. 

McLean,  C.  C Pittsburgh,  Pa Allegheny  Steel  Company 

McLean,  Percy  Roderick.  .Sydney,  Australia. .  .  .Frazer  &  Best,  Ltd. 

Mahoney,  W.  H New  York Merchants  Ass'n  of  New  York 

Mann,  Phillip New  York Packard  Motor  Car  Company 

480 


Delegates  and  Guests 


Individual.  Address.  Representing. 

Marcone,  Paul  P New  York National  Surety  Company 

Marsh,  Chas.  J Pittsburgh,  Pa Standard  Underground  Cable  Co 

Marshall,  N.  M New  York N.  M.  Marshall  &  Co.,  Bombay! 

India 

Martinez,  Diego Cartagena,  Colombia. Chamber  of  Commerce,  of  Carta- 
gena, Colombia 

Martinez  H.,Nepomuceno.New  York Banco  de  la  Mutualidad,  Bucara- 

manga,  Colombia 

Mateer,  H.  W Mansfield,  O Ohio  Suspender  Company 

Matthews,  James New  York National  Ass'n  of  Credit  Men 

Maxim,  Frederic  L New  York United  States  Rubber  Export  Co., 

Ltd. 

May,  Theo.  M New  York Cia.  Comercial  Latina-Americana 

Mayer-Bacum,  Richard. .  .  London,  England. .  .  . 

Mazzoni,  Tito Paris,  France 

Medzikhovsky,  C.  J New  York Russian  Embassy 

(Russian  Commercial  Attach6) 

Meggy,  R.  G New  York "El  Comercio" 

Meldrum,  Herbert New  York Kranich  &  Bach 

Melick-Beglaroff ,  Miss  E .  Petrograd,  Russia .  .  .  Russian  Ministry  of  Agriculture 

Melka,  W.  F New  York Manhattan  Electric  Supply  Co. 

Merriam,  James  R New  York "The  World's  Work" 

Meyer,  Alfred New  York National  Bank  of  Nicaragua 

Mercantile  Bank  of  the  Americas 

Meyer,  J.  F New  York. Atlas  Portland  Cement  Company 

Miles,  C.  C New  York Board  of  Foreign  Missions,  Meth- 
odist Episcopal  Church 

Miller,  Herbert  S Bridgeport,  Conn. .  .  .  Lake  Torpedo  Boat  Company 

Milroy,  J.  W Waukesha,  Wis White  Rock  Mineral  Springs  Co. 

Miranda,  Alfredo New  York J.  L.  Mott  Iron  Works 

Montgomery,  W.  P Washington,  D.  C. .  .Pan-American  Union 

Montt,  D.  G Wellesley  Hills,  Mass.Babson's  Statistical  Organization 

Moora,  Peter Newark,  N.  J Patton  Paint  Company 

Moore,  John  A New  York Ajax-Grieb  Rubber  Company 

Moore,  John  Bassett New  York 

Moore,  J.  N New  York Patterson-Sargent  Company 

Moritzen,  Julius New  York "Las  Americas" 

Morrell,  John  W Hartford,  Conn Franklin  Electric  Mfg.  Co. 

Morrow,  D.  A Washington,  D.  C . .  .  Federal  Trade  Commission 

Morrow,  James  M New  York W.  G.  Knapp 

Muchnic,  Chas.  M New  York American  Locomotive  Sales  Corp'n 

National  Foreign  Trade  Council 

Mueller,  Adolph Decatur,  111 H.  Mueller  Mfg.  Company 

Muller,  Max Guayaquil,  Ecuador. .  Max  Muller  &  Company 

Myers,  Arthur  L Newark,  N.  J W.  H.  Compton  Shear  Company 

National  Ass'n  of  Credit  Men 

Naetzker,  Louis Washington,  D.  C. .  .Bureau  of  Foreign  and  Domestic 

Commerce 

Nash,  Duane  H Millington,  N.  J Duane  H.  Nash,  Inc. 

Neese,  Elbert  H Wilmington,  Del.  .  .  .Pusey  &  Jones  Company 

Neilson,  Jason  A New  York Brown  Bros.  &  Company 

Mercantile  Bank  of  the  Americas 

Neuflize,  Baron  Jacques  deParis,  France Chamber  of  Commerce,  Paris 

Nevin,  A.  Parker New  York National  Association  of  Mfrs. 

Newkirk,  John  L.,  Jr Chattanooga,  Tenn.  .Chattanooga  Mfrs.  Association 

Nickerson,  J.  F Chicago,  111 American  Ass'n  of  Refrigeration 

Nissen,  Ludwig New  York Ludwig  Nissen  &  Company 

Noble,  R.  G New  York Union  Carbide  Sales  Company 

Nodocker,  F.  E New  York U.  S.  Steel  Products  Company 

Noel,  J.  Vavasour New  York Noel  News  Service 

Norton,  J.  P New  York "Wall  Street  Journal" 

Nunemacher,  F.  C New  York National  Ass'n  of  Mfrs. 

Ober,  A.  M Chagrin  Falls,  O  .  .  .  .  Ober  Manufacturing  Company 

O'Callaghan,  Thos.,  Jr .  .  .Trenton,  N.  J Empire  Rubber  &  Tire  Co. 

O'Connor,  H.  T .  . New  York Robert  H.  Ingersoll  &  Brother 

Oederlin,  Frederick New  York Consulate  of  Switzerland 

Chamber  of  Commerce  of   Zurich 

Ogilvie,  P.  M New  York Columbia  University 

O'Keefe,  B.  J New  York United  Fruit  Company 

Oler,  Edward  F New  York 

Olt,  John  A Detroit,  Mich Hudson  Motor  Car  Company 

481 


International  Trade  Conference 


Individual.  Address.  Representing. 

Opachich,  Dushan Belgrade,  Serbia 

Oudin,  M.  A New  York General  Electric  Company 

National  Foreign  Trade  Council 

American  Mfrs.  Export  Ass'n 

Painter,  F.  V.  N Salem,  Va Comas  Cigarette  Machine  Co. 

Parker,  Albert  E New  York Marks  &  Clerk 

Parker,  J.  Russell Brooklyn,  N.  Y Parker,  Stearns  Company 

Parker,  Lewis  D Hartford,  Conn Billings  &  Spencer  Company 

Parker,  W.  A New  York 

Parmelee,  Chas.  L New  York Parmelee  &  Company 

Banco  de  Comercio,    Tegucigalpa, 

Honduras 
Parrish,  J.  Scott Richmond,  Va Richmond  Cedar  Works 

Richmond  Chamber  of  Commerce 

Partridge,  A.  G Akron,  O Firestone  Tire  &  Rubber  Co. 

Patchin,  Robert  H New  York National  Foreign  Trade  Council 

Paullin,  Enos Bridgeton,  N.  J Ferracute  Machine  Company 

Pearson,  A.  C New  York "Dry  Goods  Economist" 

Peck,  William  B Providence,  R.  I .  .  .  .  Waite-Thresher  Company 

Peck,  William  E New  York William  E.  Peck  &  Company 

Peffly,  Irvin  W New  York American  Stove  Co.,  St.  Louis,  Mo. 

Pelton,  R.  R Westfield,  N.  J Welch  Grape  Juice  Company 

Penny,  David  H.  G New  York Irving  National  Bank 

Pepper,  S Chicago,  111 "Export  American  Industries" 

Perk,  A.  C.  A Amsterdam,  Holland. Amsterdam  Ryting  Maatschappij 

Perutz,  Leopold New  York Schenker  &  Co.,  Vienna,  Austria 

Peynado,  Francisco  J New  York "Las  Novedades" 

Camara  de  Comercio,  Industria  y 

Agricultura,  Santo  Domingo 

Pezet,  Federico  Alfonso. .  .Washington,  D.  C. .  .Peruvian  Legation 
(Minister  of  Peru) 

Phelps,  I.  J New  York Packard  Motor  Car  Company 

Phillips,  A New  York U.S.  Mortgage  &  Trust  Co. 

Phillips,  F.  S Long  Island  City. .  .  .  American  Ever  Ready  Works 

Piatt,  R.  A New  York R.  H.  Ingersoll  &  Brother 

Pickard,  Edward  T New  York Minot,  Hooper  &  Company 

Pilcher,  W.  F Baltimore,  Md Crown  Cork  &  Seal  Company 

Pinheiro,  H.  C.  deMartins.New  York Brazilian  Consulate-General 

(Brazilian  Consul-General) 

Poggenburg,  Geo.  F.  W.  .  .Pontiac,  Mich General  Motors  Truck  Company 

Poler,  F.  M Medina,  N.  Y A.  L.  Swett  Iron  Works 

Pombo,  Esteban  de Cartagena,  Colombia.  Chamber  of  Commerce  of  Carta- 
gena 

Pope,  George Hartford,  Conn National  Association  of  Mfrs. 

Porter,  E.  C New  York Bureau  of  Foreign  and  Domestic 

Commerce 

Porter,  F.  F New  York National  Association  of  Mfrs. 

Postnikoff ,  A.  S New  York International  Mfrs.  Sales  Co. 

Russian    Ass'n    of    Commerce    & 
Industry,  Moscow 

Power,  R.  R Baroda,  India With  N.  M.  Marshall,  New  York 

Pratt,  B.  G New  York E.G.  Pratt  Company 

Pratt,  Dr.  E.  E Washington,  D.  C.  .  .Bureau    of    Foreign    &    Domestic 

Commerce 

Prentiss,  Henry New  York Prentiss  Tool  &  Supply  Co. 

Price,  Theo.  H Little  Rock,  Ark.  .  .  .Little  Rock  Board  of  Trade 

Procter,  Wm.  L New  York United  States  Rubber  Export  Co. 

Proskauer, 

Pulsifer,  N.  T New  York Valentine  &  Company 

Quinn,  P.  E New  York Government  of  New  South  Wales 

Ramos,  Jaime Boston,  Mass Thomas  G.  Plant  Company 

Ramsay,  William Philadelphia,  Pa Miller  Lock  Company 

Randall,  J.  H New  Brunswick,  N.  J. 

Read,  William  F.,  Jr Philadelphia,  Pa Wm.  F.  Read  &  Sons  Company 

Reed,  Henry  D New  York Bishop  Gutta  Percha  Company 

Rubber  Club  of  America 

Reed,  Louis  C.  M Washington,  D.  C.  .  .Chamber  of  Commerce  U.  S.  A. 

Reeve,  H.  E New  York Gerhard  &  Hey,  Inc. 

Rehse,  M.  B New  York Binney  &  Smith  Company 

Reibstein,  Louis New  York Crescent  Garter  Company 

Reibstein,  Robert New  York Crescent  Garter  Company 

482 


Delegates  and  Guests 


Individual.  Address.  Representing. 

Reilly,  Frank  G.  W New  York N.  M.  Marshall 

Reynolds,  B.  H New  York Mexican  Telegraph  Company 

Ricca,  Hugo  F New  York Ricca  &  Son 

Rice.  W.  L Plainville,  Mass Whiting  &  Davis  Company 

Rich,  Lawrence  H New  York Board  of  Foreign  Missions,  Meth- 
odist Episcopal  Church 

Richards,  C.  H New  York Orr  &  Sembower 

Richards,  George  H New  York Merchants  Ass'n  of  New  York 

Remington  Typewriter  Company 

Richardson,  E.  L Chicago,  111 Henry  W.  Peabody  &  Co. 

Richie,  Edward  L Philadelphia,  Pa S.  L.  Allen  &  Company 

Ried,  Rodolfo New  York United  Export  Bureau 

Riera,  James New  York United  States  Rubber  Export  Co.. 

Ltd. 

Rindelaub,  Robert  C Constantinople,  Turkey 

Rinehart,  C.  R New  York Lehigh  Car  Wheel  &  Axle  Works 

Lehigh  Foundry 

Fuller  Engineering  Company 

Allentown  Portland  Cement  Co. 

Ripir,  John  T.  van New  York United  Fruit  Company 

Ritchings,  H.  A Zanesville,  O Mosaic  Tile  Company 

Roberts,  F.  L Cleveland,  O Cleveland  Chamber  of  Commerce 

Roberts,  Harry  W Wilmington,  Del .  .  .  Jos.  Bancroft  &  Sons  Company 

Roberts,  R.  G New  York 

Robertson,  J.  G Akron,  O Firestone  Tire  &  Rubber  Company 

Robinson,  Chas New  York Star  Drilling  Machine  Company 

Akron,  O. 

Robinson,  Sam  B Cleveland,  O 

Rockwell,  H.  P Rochester,  N.  Y Yawman  &  Erbe  Mfg.  Company 

Rogers,  Carroll  S St.  Louis,  Mo American  Stove  Company 

Rojas,  Jaime San  Jos6,  C.  R Banco  Mercantil  de  Costa  Rica 

Roper,  Harry  W New  York Bond  &  Goodwin 

Rose,  R.  E Rochester,  N.  Y Yawman  &  Erbe  Mfg.  Company 

Rosencrantz,  Hilliard  J .  .  .  New  York Gaston,  Williams  &  Wigmore,  Inc. 

Rosenfeld,  Edward  L New  York 

Ross,  P.  H.  W New  York National  Marine  League 

Rossati,  Guido New  York Italian  Consulate-General 

Rovensky,  John  E New  York National  Bank  of  Commerce 

Rumpf,  F.  A Stamford,  Conn Remington  Oil  Engine  Company 

Russell,  S.,  Jr Middletown,  Conn..  .The  Russell  Mfg.  Company 

Rutgers,  S.  T New  York Consulting  Engineer  to  Delhi  & 

Dutch  India  Railway  Cos. 

Ryan,  M.  W New  York W.  H.  Brown,  Son  &  Company 

Salas,  F.  Javier New  York Consulate-General  of  Spain, 

Centro  de  Informacion  Comercial 
del  Ministerio  de  Estado 

Salvesen,  J.  T -New  York National  Association  of  Mfrs. 

Sammons,  Thos Shanghai,  China 

(American  Consul-General) 

Santilhano,  J New  York Guaranty  Trust  Company 

Sargent,  Henry  B New  Haven,  Conn. .  .Sargent  &  Company 

New  Haven  Chamber    of    Com- 
merce 

Schall,  H.  D Detroit,  Mich Detroit  Stove  Works 

Scheeler,  I.  F New  York Lanston  Monotype  Machine  Com- 
pany, Philadelphia,  Pa. 

Schiff ,  Mortimer  L New  York Kuhn,  Loeb  &  Company 

Schiller,  E New  York Werner  &  Pfleiderer  Company 

Schirve,  A.  R Christiania,  Norway .  Malstod  &  Co. 

Schlussner,  P New  York Roessler  &«  Hasslacher   Chemical 

Company 

Schoff ,  Wilfred  H Philadelphia,  Pa Commercial  Museum 

Associagao  Commercial,  Oporto, 
Portugal 

Schoonmaker,  A Cleveland.  O Upson  Nut  Company 

Schott,  Arnold New  York Lloyd  Brazileiro 

Schraffer,  D.  M New  York Pennsylvania  R.  R.  Company 

Schulz,  Emil  von Moscow,  Russia E.  Heyde  &  E.  von  Schulz 

Search,  Theodore  C Yardley,  Pa 

Seebeck,  Georg  von New  York Guaranty  Trust  Company 

Selby.  Mark  W Portsmouth,  O The  Selby  Shoe  Company 

483 


International  Trade  Conference 


Individual.  Address.  Representing. 

Selden,  Geo.  D Erie,  Pa Erie  City  Iron  Works 

Setna,  J.  A Bombay,  India With  N.  M.  Marshall,  New  York 

Schaaff,  J.  C New  York Patterson-Sargent  Company 

Shacklock,  E.  F Perth,  Australia Australian  Cadets 

Shaw,  E.  C Akron,  O B.  F.  Goodrich  Company 

Shaw,  James  G New  York Thurston  &  Braidich 

National      Confectioners     Ass'n, 
Cincinnati,  O. 

Shearer,  H.  M New  York H.  W.  Johns- M  an  ville  Company 

Sherman,  E.  C Detroit,  Mich Ford  Motor  Company 

Shoninger,  Chas New  York American  Chamber  of  Commerce, 

Paris,  France 

Shulze,  R.  G Fort  Wayne,  Ind S.  F.  Bowser,  &  Company 

Sierra,  M.  J New  York " Continental" 

Silvester,  Maurice New  York Comptoir    National    d'Escompte, 

Paris,  France 

Simondetti,  E.  T New  York Foreign  Trade  Service,  Inc. 

Simons,  Lieut  J.  J Perth,  Australia Australian  Cadets 

Singh,  Bhai  Suchet New  York (of  Ferozepore,  India) 

Slauson,  H.  L Winsted,  Conn William  L.  Gilbert  Clock  Co. 

Smith,  Acheson Niagara  Falls,  N.  Y.  .International    Acheson    Graphite 

Company. 

Smith,  Alexander  R New  York 

Smith,  Frank  G Brooklyn,  N.  Y F.  G.  Smith 

Smith,  Gershom New  York Computing -Tabulating -Recording 

Company 

Smith,  Oscar  W New  York National  Ass'n  of  Mfrs.  of  Medic- 
inal Products,  Detroit,  Mich. 

Smith,  Will  L New  York B.  V.  D.  Company 

Smyth,  Robert  J Ansonia,  Conn Ansonia  Electrical  Company 

Snider,  C.  S New  York R.  M.  Ford  Company 

Snider,  Guy  Edward New  York College  of  the  City  of  New  York 

Snow,  Fred  W New  York Ramapo  Iron  Works 

Snow,  M.  B Detroit,  Mich Detroit  Twist  Drjll  Company 

Snow,  Wm.  Wait New  York Ramapo  Iron  Works 

Snowden,  Dr.  Albert  A. .  .New  York National  Association  of  Mfrs. 

Solorzano,  L.  F Barcelona,  Spain .... 

Sosnawski,  George  J Warsaw,  Russia 

Sossidi,  N.  J New  York Hay  &  Sossidi 

Southworth,  Constant. .  .  .Jersey  City,  N.  J American  Type  Founders  Co. 

Southworth,  Robert  A Boston,  Mass 

Several,  Antonio  Carlos,  deBahia,  Brazil Chamber    of    Commerce,    Bahia, 

Brazil 

Spear,  E.  C Springfield,  Mass. .  .  .  Cheney  Bigelow  Wire  Works 

Springfield  Board  of  Trade 

Stanton,  Herbert  A Worcester,  Mass.  .  .  .Norton  Company 

Stark,  C.  J New  York " Iron  Trade  Review" 

Stehn,  O.  P Cleveland,  O Hydraulic  Pressed  Steel  Company 

Stevens,  Chester  N New  York Illinois  Mfrs.  Ass'n,  Chicago,  111. 

Stevenson,  P.  J Washington,  D.  C.  .  .Bureau  of  Foreign  and  Domestic 

Commerce 

Stewart,  Hamilton Pittsburgh,  Pa Harbison- Walker  Refractories  Co. 

Stone,  Edward  L Roanoke,  Va Stone  Printing  &  Mfg.  Company 

Strecker,  A.  H Marietta,  O Strecker  Bros.  Company 

Strecker,  B.  F Marietta,  O Strecker  Bros.  Company 

Strobhar,  Edward  S New  York The  Bradstreet  Company 

Swander,  Dan  C Akron,  O Firestone  Tire  &  Rubber  Company 

Swift,  Charles  M Middlebury,  Vt Manila  Merchants'  Ass'n, 

Swift,  E.  G Detroit,  Mich Parke,  Davis  &  Company 

Tavares,  J.  G Portsmouth,  O Selby  Shoe  Company 

Taylor,  Geo.  F New  York American  Hardware  Corporation 

Taylor,  W.  H New  York Scranton  Supply  &  Machinery  Co. 

Teitelbaum,  William San  Antonio,  Tex American  Anti-Intervention  Ass'n. 

Tetlow,  Mrs.  Clara Philadelphia,  Pa Tetlow  Mfg.  Company 

Thatcher,  James New  York National  City  Bank 

Thomas,  C.  E New  York U.  S.  Steel  Products  Company 

Nat'l  Ass'n  of  Credit  Men 

Thomas,  M.  P Rio  de  Janeiro,  Brazil. 

Thomas,  Stirling  H Wilmington,  Del.  .  .  .Pusey  &  Jones  Company 

Chamber  of  Commerce,  Wilming- 
ton, Del. 

484 


Delegates  and  Guests 


Individual.  A  ddress.  Representing. 

Thompson,  P.  Acker New  York Russell  Mfg.  Company 

Thompson,  H New  York Union  Carbide  Company 

Thompson,  J.  L Stamford,  Conn Yale  &  Towne  Mfg.  Company 

Thorndyke,  W.  E Medina,  O A.  I.  Root  Company 

Thurber.  J.  W Shelburne  Falls 

Mass Lamson  &  Goodnow  Mfg.  GJ. 

Titcomb,  Geo.  E New  York 

Topakyan,  H.  H New  York Persian  Consulate-General 

Persian  Consul-General 

Topka,  Gilbert  S New  York Nevins  Church  Press 

Tower,  John  B New  York U.  S.  Rubber  Export  Co.,  Ltd. 

Tregoe,  J.  H New  York National  Ass'n  of  Credit  Men 

Triller,  Chas New  York Wood  &  Selick 

National    Confectioners'    Associa- 
tion, Philadelphia 

Trump,  W.  H Philadelphia,  Pa Alexander  Bros. 

Turner,  J.  K Cleveland,  O 

Uchiike,  R Kobe,  Japan Kobe  Commercial  College 

Uehling,  F.  P Passaic,  N.  J Uehling  Instrument  Company 

Passaic  Board  of  Trade 

Upshur,  John  A New  York Atlas  Portland  Cement  Company 

Vail,  C.  M New  York Bonner  &  Barnewall,  Inc. 

Van  Winkle,  Clifford  S.  .  .New  Brunswick,  N.  J. Interwoven  Mills,  Inc. 

Vedder,  Geo.  C New  York Steven  de  Csesznak,  Inc. 

Vieira,  Benedicto Rio  de  Janeiro,  Brazil. Lloyd  Brazileiro 

Vintschger,  G New  York Markt  &  Hammacher  Company 

Merchants  Ass'n  of  New  York 

Vogeler,  W.  R New  York King  Motor  Car  Company 

Vondermuhll,  Alfred Basel,  Switzerland . .  .  Basel  Handelskammer 

Wadsworth,  D.  L Cleveland,  O Lakewood  Engineering  Company 

Walker,  Elbridge Easton,  Pa Thomas  Iron  Company 

Walton,  Henry Indianapolis,  Ind. .  .  .  E.  C.  Atkins  &  Company 

Ward,  E.  A E.  Palestine,  O McGraw  Tire  &  Rubber  Co. 

Warren,  Daniel New  York American  Trading  Company 

National  Foreign  Trade  Council 

Watson,  J.  C New  York White  Rock  Mineral  Springs  Co. 

Webb,  Francis  A Philadelphia,  Pa Wm.  Simpson  Sons  &  Company 

Weed,  R.  A New  York 

Weinstock,  Harris San  Francisco 

Weston,  Geo New  York Guaranty  Trust  Company 

Wettre,  Trygve Christiania,  Norway .  Chamber   of   Commerce,    Christi- 

ania,  Norway 

White,  G.  D Newark,  N.  J Patton  Paint  Company 

White,  Capt.  Wm.  P Lowell,  Mass Lowell  Paper  Tube  Corporation 

Whiting,  Henry St.  Clair,  Mich Diamond  Crystal  Salt  Company 

Whitney,  F.  C Jersey  City,  N.  J. .  .  .  Davis-Bournonville  Company 

Whittier,  Carl  S New  York 

Whittley,  G.  H York,  Pa The  Dentists'  Supply  Company 

Wiggins,  R.  H Bloomfield,  N.  J H.  B.  Wiggins  Sons  Company 

Williams,  A.  J Mill  Valley,  Cal 

Williams,  J.  Oliver New  York 

Williams,  Lewis  B Cleveland,  O Hayden,  Miller  &  Company 

Williams,  Louis  W Beaver  Falls,  Pa ....  Union  Drawn  Steel  Company 

Williams,  R.  G Worcester,  Mass ....  Norton  Company 

Williamson,  Chr New  York Chr.  B  jelland  &  Company 

Willis,  C.  E New  York Real  Lace  &  Novelty  Company 

Wilson,  C.  M New  York "Dun's  Review" 

Wilson,  Percy  H Philadelphia,  Pa Ass'n  of  Portland  Cement  Mfrs. 

Wing,  David  L Washington,  D.  C.  .  .Federal  Trade  Commission 

Wisnewski,  Ed New  York With  N.  M.  Marshall 

Wood,  H.  K, Piqua,  O Wood  Shovel  &  Tool  Company 

Wood,  H.  M  .  .  .  .Boston,  Mass "Export    American    Industries," 

New  York 

Woolley,  Robert  W Washington,  D.  C.  .  .The  Secretary  of  the  Treasury 

(Director  of  the  Mint) 

Wortham,  C.  B Jersey  City,  N.  J. .  .  .  Davis-Bournonville  Company 

Wright,  Willard  M New  York The  Thomas  Iron  Company 

Wulp,  Wm.  C New  York William  E.  Peck  &  Company 

Wyman,  Walter  F New  York The  Carter's  Ink  Company,  Bos- 
ton, Mass. 
Yagi,  M New  York Japanese  Consulate-General 

4-85 


International  Trade  Conference 


Individual.  Address.  Representing. 

Zarate,  Rodrigo Lima,  Peru 

Zayas,  Octavio Havana,  Cuba Camara  de  Comercio,  Industria  y 

Navigacion  de  la  Isla  de  Cuba 

Zimmerman,  Erich  W .  . .  .  New  York New  York  University 

Zimmerman,  Walter  von. .  Lansing,  Mich Olds  Motor  "Works 

Znamiecki,  Alexander.  .  .  . New  York National  City  Bank 

Zoller,  A.  E Quincy,  111 Electric  Wheel  Company 


486 


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